Oil falls 1.8 percent as Irma heads for Florida, threatening demand
Fri Sep 08 2017
NEW YORK (Reuters) - Oil prices fell on Friday after almost a week of rises as Hurricane Irma, one of the most powerful storms in a century, drove toward Florida and the U.S. Southeast after destroying islands in the Caribbean.
Irma, the second major hurricane to approach the United States in two weeks, has already killed 14. Its predecessor, Harvey, shut a quarter of U.S. refineries and 8 percent of U.S. oil production, with crude prices slumping as low refining activity sharply reduced demand for oil to process.
It will take weeks for the U.S. petroleum industry to return to full capacity, analysts said. In the case of Irma, analysts are more worried that devastation wrought by the storm could sharply reduce demand for energy.
"I do think there is a certain concern that there's a production increase in the U.S. and you don't see demand," said Gene McGillian, manager of market research at Tradition Energy.
U.S. light crude oil was down 87 cents or 1.8 percent lower at $48.22 a barrel by 11:31 p.m. EDT (1531 GMT). Brent crude was down 33 cents or 0.6 percent at $54.16 a barrel after reaching its highest level since April at $54.80.
Both benchmarks were on track for weekly gains exceeding 1.4 percent.
"Hurricanes can have a lasting effect on refinery and industry demand," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt.
U.S. oil output fell by almost 8 percent because of Harvey, from 9.5 million barrels per day (bpd) to 8.8 million bpd, according to the Energy Information Administration (EIA). But Irma is headed away from the heart of U.S. oil production.
"Irma looks like it will miss the key Gulf areas, and we're more worried about shale," said Mark Watkins, regional investment manager at U.S. Bank.
At 1:30 p.m. EDT energy services company Baker Hughes releases its rig count data.
Port and refinery closures along the Gulf coast and harsh sea conditions in the Caribbean have hit shipping.
"Imports (of oil) to the U.S. Gulf Coast fell to levels not seen since the 1990s," ANZ bank said.
Hurricane Irma hit the Dominican Republic and Haiti on Friday, heading for Cuba and the Bahamas. It was predicted to reach Florida by Sunday.
The U.S. National Hurricane Center (NHC) said Irma was a Category 5 hurricane, with wind speeds of 160-185 miles per hours.
Hurricane Jose is heading for the Caribbean Leeward islands, which have just been devastated by Irma.
In industry news, Chinese conglomerate CEFC will buy a 14.16 percent stake in Russian oil producer Rosneft [ROSN.MM] from a consortium of Glencore and the Qatar Investment Authority.
(Reporting by Julia Simon in New York, Additional reporting by Dmitry Zhdannikov and Christopher Johnson in London, and Henning Gloystein in Singapore; Editing by Greg Mahlich and David Gregorio)
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