Oil Mixed in Thursday Trade
NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were shallowly mixed Thursday morning as a tropical storm threatens to disrupt product supply at the Texas Gulf Coast that has generated buying in RBOB and ULSD contracts. A stronger U.S. dollar and higher crude production in the United States exert downward pressure on West Texas Intermediate crude prices.
At last look, the October WTI crude contract eased 49cts to $47.92 bbl. October Brent crude contract on the IntercontinentalExchange fell 27cts to $52.30 bbl, reversing off a $52.71 three-day high. September ULSD futures gained 0.79cts to $1.6323 gallon, off a 10-day high of $1.6419. September RBOB futures climbed 2.85cts to $1.6474 gallon, off a three-week high of $1.6570.
Tropical Storm Harvey, which is expected to strengthen into a Category 1 hurricane in the Gulf of Mexico, could make landfall on Friday along the Texas Gulf Coast, the National Hurricane Center said. The storm, moving at 60 mph, has forced a reduction in offshore platform production, and the evacuation of non-essential workers. Heavy rainfall, an expected storm surge and flash flooding could impact Corpus Christi and surrounding areas.
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The storm effects could spread across the South and impact refined oil product supply. The Gulf Coast is home to a high percentage of U.S. oil refineries. Shell USA, Anadarko Petroleum and ExxonMobil Corp. have began removing staff from offshore platforms in the GOM.
The dollar strengthened ahead of a meeting of global central bankers in Jackson Hole, Wyoming, which could signal changes to monetary policy. The annual meeting starts Thursday, with Federal Reserve Chair Janet Yellen expected to provide her outlook for the economy, monetary policy and interest rates.
Oil traders also continue to mull data released on Wednesday showing an eighth straight weekly crude stock draw and a third straight weekly crude production increase during the week-ended Aug. 18.
The Energy Information Administration reported U.S. crude oil stocks dropped 3.3 million bbl that reduced total crude stocks to a fresh 19-month low at 463.2 million bbl, with gasoline stocks down 1.2 million bbl. The report also showed U.S. crude oil production rose 26,000 bpd last week to a 9.528 million bpd better than two-year high.
"This [production increase] remains a bearish factor and is expected to remain bearish for the foreseeable future," said analyst Kyle Cooper at ION Energy.
Saudi Arabia and Russia are meeting to reportedly discuss extending the current production cuts into June 2018. Another OPEC meeting is scheduled for Sept. 22, with Libya and Nigeria invited to discuss their output levels, said the report.
George Orwel can be reached at george.orwel@dtn.com
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