NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Thursday with West Texas Intermediate crude oil and ULSD lower while RBOB rallied to a three-week high as Hurricane Harvey sped across the Gulf of Mexico and threatened to slam oil refineries in the Texas Gulf Coast when it makes landfall this weekend.
"This is the initial reaction where crude oil [price] is struggling on concerns that storm will shut down refineries and we won't use more oil and gasoline," said analyst Phil Flynn at Price Futures. "The storm is moving slowly and if it destroys refining capacity, it could be weeks or months before things get back to normal, and that could boost oil prices down the road."
The U.S. National Hurricane Center upgraded Harvey to a hurricane from a tropical storm on Thursday afternoon, and said it would strengthen into a Category 3 hurricane later before hitting Corpus Christi area late Friday or early Saturday. The storm is now packing winds up to 85 mph and is expected to hit the central Texas coast with winds of 115 mph.
Hurricane Harvey is expected to cause a storm surge that will flood parts of the Texas coastline and could linger for days over the state, dumping up to 30 inches of rain on some areas.
The Bureau of Safety and Environmental Enforcement reported that based on data submitted early this morning by companies operating offshore, personnel have been evacuated from a total of 39 production platforms, 5.29% of the 737 manned platforms in the Gulf of Mexico ahead of the hurricane.
A stronger U.S. dollar and higher crude production in the United States also exerted downward pressure on WTI and ULSD futures. The greenback strengthened as global central bankers gathered in Jackson Hole, Wyo., for their annual meeting. Federal Reserve Chair Janet Yellen will be one of the keynote speakers at the meeting, providing her outlook for the economy, monetary policy and interest rates.
The market also was concerned about data showing U.S. crude production continued to increase during the week-ended Aug. 18, up 26,000 bpd last week to a 9.528 million bpd better than two-year high, according to the Energy Information Administration.
Overseas, Saudi Arabia and Russia are considering extending the current production cuts of 1.8 million bpd by members and 10 nonmembers of the Organization of Petroleum Exporting Countries into June 2018. The cuts are currently set to expire in March 2018.
The NYMEX October WTI crude contract settled 98cts lower at $47.43 bbl, off a three-day low of $47.06.
October Brent crude contract on the IntercontinentalExchange fell 53cts to $52.04 bbl, reversing off a $52.71 three-day high. September ULSD futures settled 0.34cts lower at $1.6210 gallon, off a 10-day high of $1.6419. September RBOB futures climbed 4.52cts to $1.6641 gallon, off a three-week high of $1.6719.
George Orwel can be reached at email@example.com
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