On Thursday, Brent oil prices tightened, reaching near 3-1/2 month highs as U.S. refiners resumed after Hurricane Harvey advanced their crude processing and the U.S. dollar dropped.
Brent crude futures LCOc1 increased 28 cents at $54.48 a barrel by 1143 GMT, close to their highest since May 25. U.S. West Texas Intermediate (WTI) crude futures CLc1 calmed by 11 cents to $49.05 a barrel, close to a four-week high.
Facilities in the U.S. Gulf Coast were slowly recovering from the horrible effects of Harvey, which trashed Louisiana and Texas nearly two weeks ago, closing key infrastructure in the middle of the U.S. oil and natural gas industry. As of Wednesday, toughly 3.8 million barrels of daily refining capacity, or 20 percent of the U.S. total, was shut down, though a number of refineries and petroleum-handling ports were reopening.
Prices also received support from a weakening U.S. dollar. Because oil is priced in the U.S. currency, a lower dollar makes it less expensive for foreign buyers.
Also, prices were weighed down by increasing Libyan production and by concerns that Hurricane Irma in the Caribbean could disrupt crude shipments in and out of the United States.
Irma hit Caribbean islands overnight with wind speeds up to 185 miles per hour (295 km/h) and was heading for Florida, where fuel shortages were reported as retailers fought to keep up with demand from customers filling tanks prior to the storm’s landfall, anticipated this weekend.
Another Atlantic storm, Jose, is on the heels on Irma’s and has been upgraded to hurricane strength by the U.S. National Hurricane Center. Yet another hurricane, Katia, is forming in the Gulf of Mexico.
“Demand may continue to be distorted as multiple hurricanes make their way across the Caribbean,” stated Jeffrey Halley, senior market analyst at futures brokerage OANDA.
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In Libya, the Sharara oilfield, the country’s biggest, was resuming production on Wednesday after the resuming of a valve on a pipeline shut by an armed group for more than two weeks, oil industry sources reported.
“The upside (to oil prices) was limited by the lifting of the force majeure of Libya’s Sharara crude oil exports,” Tamas Varga of PVM oil brokerage stated.