Crude Oil Market Higher on Hurricane Impact

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At the start of August, the OPEC meeting raised hopes of better compliance with Saudi indicating more export cuts. Estimates from market intelligence firm Genscape showed an inventory growth of 1.2 million barrels in Cushing last week, said market sources who saw that data on Monday. As I have written before, the IEA is notorious for underestimating demand and had to once again raise their forecast.

Strong second-quarter demand has buoyed oil markets, which have been struggling to rebalance as a supply glut has weighed heavily on prices, the IEA said in its September report released Wednesday.

US West Texas Intermediate (WTI) crude was down 30 cents at $47.77 a barrel.

Refinery use fell a further 2.0% on the week due to the continuing impact of outages as flooding caused substantial damage, although markets had been expecting a recovery in capacity use for the week.

Oil prices remain near $50/bbl despite nine months of output cuts by a coalition of oil producers led by OPEC and Russian Federation. OPEC supply fell by 210,000 barrels, marking the first decline in five months. But the EIA projects US average crude oil production to reach 9.3 MMbbl/d for 2017 and 9.8 MMbbl/d in 2018-the highest annual average in USA history.




In a monthly report, the Organisation of the Petroleum Exporting Countries (Opec) said the world would need 32.83 million barrels per day (bpd) of Opec crude next year, up 410,000 bpd from its previous forecast. For 2018, the IEA is predicting growth of 1.4 million barrels per day, or 1.4 percent.

Much of that was due to a near 10 million-barrel increase in stocks in the U.S. Gulf region and as crude production rebounded from a brief Harvey interruption. US supplies increased 5.9 million barrels in the past week, the Energy Information Administration reported Wednesday morning.

Saudi Arabia has energy-reliant economy continues to struggle since oil prices tanked in 2014.

The United States Oil ETF (NYSEMKT: USO) traded up about 0.6%, at $9.93 in a 52-week range of $8.65 to $12.00.

Markets were upended in late August when Hurricane Harvey struck the southern coast of Texas, sidelined a good portion of total USA refining capacity and threatened production centers in the Gulf of Mexico and inland shale basins.

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