Oil prices steady as US oil firms avoid worst of massive storm

28 August 2020 (Last Updated August 28th, 2020 12:09)

Oil prices have edged down as a large hurricane raced towards the heart of the US oil industry in Louisiana and Texas, without inflicting any extensive damage to the country’s refineries.

Oil prices steady as US oil firms avoid worst of massive storm
The US energy industry had cut crude production of about 1.56Mbpd, which accounted for 83% of the Gulf crude oil production. Credit: J. Stephen Conn.

Oil prices have edged down as a large hurricane raced towards the heart of the US oil industry in Louisiana and Texas, without inflicting any extensive damage to the country’s refineries.

Brent crude oil futures rose by $0.05 to $45.14 a barrel while US West Texas Intermediate (WTI) crude futures increased by $0.01 to $43.05 a barrel, Reuters reported.

Vanda Insights oil market analyst Vandana Hari was quoted by the news agency as stating: “With the US Gulf hurricanes out of the way and preliminary assessment showing no damage to the upstream or downstream facilities, crude has surrendered most of the storm premium and could enter a holding pattern again.”

Tropical storm Hurricane Laura had hit with winds of 240km/h, knocking down trees, damaging buildings and causing widespread power outages.

However, refiners appear to have avoided the worst of the storm.

RBC Capital said in a note: “Crude prices have barely budged this week but refining margins have been hammered as flash floods disrupt normal consumption patterns, likely for a longer period of time than (Gulf of Mexico) production remains offline.”

The US energy industry had cut crude production of 1.56Mbpd, which accounted for 83% of the Gulf crude oil production.

Nine refineries capable of converting 2.9Mbpd of oil into fuel were also shut down, ahead of the storm.

The Port of Houston, which is one of the largest crude oil export hubs in the US that accounts for nearly 600,000bpd of shipments, prepared for the reopening to commercial shipping on 27 August.

Meanwhile, ExxonMobil was also ready to restart units at its plant in Beaumont, Texas.