NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures were mixed Monday morning, looking for direction in the aftermath of Hurricane Irma in the Southeast and reports showing the Organization of the Petroleum Exporting Countries are making an effort to support oil prices.
While the oil complex has seesawed, the market appears encouraged Irma spared Florida of the kind of extensive damage initially feared, and that suggests the impact of the storm on consumer gasoline demand should be limited. So far, no damage to distribution fuel infrastructure in the Southeast has been reported. Recovery is underway, with more drivers returning to the road.
Oil refineries along the Texas coast have made progress in restarting operations in the aftermath of Hurricane Harvey two weeks ago. On Monday, Motiva restarted the 325,000-barrel-per-day (bpd) crude distillation unit at its 600,000 bpd Port Arthur, Texas, refinery.
As refiners continue to revive operations there will be an increase in crude throughput over the coming days, said analysts. They further note that with refining margins relatively strong, operators of several refineries are likely to delay seasonal maintenance at their facilities.
Despite restarting refineries in Texas, a new survey shows analysts expect total crude stocks for the week-ended Sept. 8 to show a build of 5.5 million barrels (bbl) while gasoline and middle distillates are each seen drawn down by 3.0 million bbl.
Energy Information Administration's oil report for the week-ended Sept. 1 showed crude oil stocks increased 4.6 million bbl to 462.4 million bbl while refinery runs dropped by 16.9% to 79.7% due to Harvey. This was the first crude stock build since mid-June while gasoline stocks fell to a 10-month low at 226.7 million bbl.
The crude market is also boosted by a report released today by OPEC estimating higher global oil demand and talk of a possible extension of ongoing output cuts by OPEC and their 10 nonmember oil producers.
OPEC's Monthly Oil Market Report for September revises up estimated global annual oil demand growth by 50,000 bpd to 1.42 million bpd for 2017 while raising the annual demand growth rate for 2018 by 70,000 bpd to 1.35 million bpd.
MOMR left unchanged its estimate that non-OPEC oil supply would grow annually this year by 780,000 bpd to 57.68 million bpd, while revising down the year-on-year growth rate for 2018 down 100,000 bpd to 1.0 million bpd.
Globally, the report said world oil supply was drawn down 410,000 bpd in August from July to 96.75 million bpd.
Citing secondary sources, MOMR said OPEC production declined in August by 79,000 bpd to 32.76 million bpd. This latest data is bullish because it contrasts with prior data that showed OPEC produced more oil in June and July.
OPEC's recent talks over potential extension of their production cuts beyond next March also supported Brent and WTI. OPEC members and their allies are considering extending 1.8 million bpd in production cuts to June 2018 from the current deadline of March 2018.
At 9 a.m. EDT, NYMEX October WTI crude oil was up 18 cents at $48.25 bbl. ICE November Brent crude gained 38 cents to $54.22 bbl, trading near a $6.00 bbl premium to WTI.
NYMEX October ULSD futures were little changed at $1.7421 gallon. October RBOB futures climbed 1.78 cents to $1.6523 gallon, with the October RBOB contract trading at a near 6.0-cent premium to the November contract.
George Orwel can be reached at firstname.lastname@example.org
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