DTN Oil

WASHINGTON (DTN) -- West Texas Intermediate futures nearest delivery on the New York Mercantile Exchange and Brent crude on the Intercontinental Exchange settled Friday's session little changed and refined products rebounded as traders monitored restoration of U.S. Gulf Coast refining capacity and return of the offshore production in the Gulf of Mexico after Hurricane Laura dissipated into post-tropical depression, leaving the region's energy infrastructure mostly un-scattered. WTI futures showed little movement over the past two sessions as markets seemed to have shrugged off Hurricane Laura's impact on refiners and producers in the region.

The storm's pathway missed the Port Arthur, Texas, -- the heart of the crude-processing facilities -- and resulted in no major damages to its energy infrastructure. Elevated inventory levels and muted demand for refined fuels because of the pandemic also capped the complex upside this week despite Laura initially reaching Category 4 storm when it hit Louisiana's coastline. Laura, however, quickly dissipated into post-tropical depression as the storm made its way northbound into Arkansas and mid-Mississippi Valley. As of Friday afternoon, Motiva Enterprises is reportedly restarting its 607,000 barrels per day (bpd) refinery in Port Arthur, Texas, the largest in the U.S., and Exxon Mobil Corp was preparing to restart units at 369,024 bpd with its Beaumont, Texas refinery.

U.S. Energy Information data reported U.S. stocks of gasoline and distillate during the week ended Aug. 21 were 4.7% and 24.7% above the seasonal five-year average. Jet fuel is slightly below the average, but within the five-year range. Across the Gulf Coast, stocks of gasoline and distillate were 14% and 43% above the five-year average respectively. Gulf Coast stocks of crude oil were 23.4% above the five-year average in the Gulf Coast.

Late Thursday, the Port of Houston, the top U.S. crude oil export hub was in the process of reopening to commercial shipping. Market sentiment is for refiners and producers in the region to quickly restart their operations as early as next week. Chevron and British Petroleum were reported to have redeployed workers to their offshore platforms in the GOM. As of 12:30 p.m. ET Friday, 84% of the oil production and 60% of the natural gas production in the federally administered areas of the U.S. Gulf of Mexico remain shut-in, according to estimates by the Bureau of Safety and Environmental Enforcement.

Separately, Baker Hughes data reported the U.S. oil rig count declined after an increase in the prior week, falling from a seven-weeks high with a decrease of 3 in the week ended Friday to 180. The number of rigs actively drilling for oil are down 562 below the same time in 2019, Baker Hughes data show. On the economic data front, University of Michigan's closely watched consumer sentiment index for August edged up 0.4 points to 74.1 versus 72 expected, reflecting some improvement in consumers' outlook for the economy.

Furthermore, government data Friday revealed U.S. consumers once again increased their personal spending in July at 1.9%, albeit at a much slower pace than two previous months. Although strong gains in consumer spending from the second quarter lows can be anticipated, those gains will slow significantly without some additional fiscal spending programs for millions of unemployed Americans and small businesses. A closely watched measure of inflation, meanwhile, posted the second big increase in a row. The PCE index, the Federal Reserve's preferred inflation barometer, rose 0.3% after a 0.5% gain the prior month. This week, the Fed announced a major shift in policy framework towards a higher inflation and keeping interest rates lower for longer. Fed Chair Jerome Powell said Thursday the central bank will allow inflation to run above the 2% cap, at least temporarily, in order to allow for fuller and more broad-based employment.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, slumped 0.62% in mid-day trading to 92.350, heading back towards two-year lows. NYMEX October WTI futures finished just shy of $43 per barrel (bbl) while spot month RBOB futures settled 3.10 cents higher at $1.3155 gallon and front-month ULSD futures added 0.55 cents at $1.2162 gallon. ICE October Brent crude expired at five-month high $45.05 bbl, with the now prompt-month delivery November futures settling at $45.81 bbl.

Liubov Georges can be reached at liubov.georges@dtn.com

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