NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures settled mixed Monday afternoon with West Texas Intermediate crude and Brent crude on the IntercontinentalExchange edging higher, while RBOB and ULSD slumped.
The mixed oil price action came as the impact of Hurricane Irma on fuel demand in Florida was being assessed, with oil refineries on the Texas Gulf Coast that were shuttered by Hurricane Harvey still coming back to service.
“The crude market is up because we expect refinery capacity to come back soon and crude demand post-storms will be strong,” said analyst Phil Flynn at Price Futures. “The situation in Florida is not as bad as we previously thought.”
Hurricane Irma knocked out power to more than 6.0 million customers in Florida, but much of the infrastructure was spared the worst feared and power is expected to return soon.
Irma slammed southwest Florida early Sunday as a Category 4 hurricane, but it has since been downgraded to a tropical storm by Monday morning as it headed toward Georgia.
Goldman Sachs bank said in its note today that the negative impact on oil demand from Irma will be smaller than the impact caused by Harvey two weeks ago after making landfall on the Texas south coast on Aug. 25 and flooding the area around Houston.
But Texas is larger than Florida and has the most concentration of oil refineries in the nation, of which most were impacted by Harvey. Most of the 31% of refining capacity shut by Harvey are now being restarted. On Monday, Motiva restarted the 325,000 bpd crude distillation unit at its Port Arthur, Texas.
NYMEX RBOB and ULSD futures slumped today since Irma restricted travel by road, air and waterways. Millions of Floridians fled from the path of the storm, and as a result of that demand for gasoline is currently limited.
Meanwhile, weekend talks between energy ministers from Saudi Arabia, Venezuela and Kazakhstan over a possible extension of production cuts beyond next March also supported Brent and WTI. According to reports, the OPEC and non-OPEC members who agreed to cut 1.8 million bpd in oil production through next March are now discussing extending it through June 2018.
NYMEX October WTI crude oil settled down 59cts at $48.07 bbl, off a one-week spot low at $47. November Brent crude on the ICE platform eased 6cts to $53.84 bbl, off a four-day low of $53.04 and closed at a $5.77 premium to WTI.
NYMEX October ULSD futures settled 2.30cts lower at $1.7427 gallon, off a four-day low of $1.7227. October RBOB futures declined by 1.31cts to a $1.6345 gallon settlement, moving off two-week spot low of $1.6006.
Looking ahead, OPEC is set to release its September Monthly Oil Market Report while the Energy Information Administration and International Energy Agency will both release their monthly reports on Wednesday. On Thursday, EIA will release its international outlook report.
George Orwel can be reached at firstname.lastname@example.org
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