NEW YORK: Oil prices steadied Wednesday, pressured by worries about the demand outlook during the coronavirus pandemic but buoyed as US producers shut output in the Gulf of Mexico ahead of Hurricane Laura.
Renewed worries over the Covid-19 pandemic, which has squeezed demand and sent prices to record lows in April, dampened market sentiment after reports this week of patients being re-infected, raising concerns about future immunity.
Brent crude fell 6 cents to US$45.80 a barrel by 1505 GMT, while US West Texas Intermediate crude rose 9 cents to US$43.44 a barrel. Both benchmarks settled at a five-month high on Tuesday.
The US energy industry was preparing for Hurricane Laura, expected to make landfall along the Gulf Coast late Wednesday or early Thursday. Nine oil-processing plants that convert nearly 2.9 million barrels per day of oil into fuel, and account for about 15% of US processing, were shutting down.
Oil producers on Tuesday had evacuated 310 offshore oil facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico's offshore production.
"Oil traders will be preoccupied with the hurricane today," said Tamas Varga of broker PVM. "Once the danger passes, demand considerations will come into focus again."
US crude oil stockpiles fell last week as exports soared the most in 18 months and refineries boosted production to the highest rate since March before the worst of the demand hit from the coronavirus pandemic, data from the Energy Information Administration showed on Wednesday.
Crude inventories, which have been on the decline for five straight weeks, fell 4.7 million barrels to 507.8 million barrels, the lowest since April in the week to Aug 21, the EIA said. Analysts had forecast in a Reuters poll a decrease of 3.7 million barrels.
Net US crude imports fell last week by just over 1 million barrels per day (bpd) as exports jumped by 1.2 million bpd, their most since February 2019.
Bob Yawger, director of energy futures at Mizuho, said the big jump in weekly exports was partly making up for the previous week's fall of about 1 million bpd, especially ahead of Hurricane Laura hitting the energy hub in US Gulf of Mexico.
"These guys are also aware that the storm is on the way and they will try to get as much crude oil out of here as fast as they can. Imports were higher too. It's a V-shaped recovery from last week. It's a two-week phenomenon," Yawger added.
Oil majors on Friday began evacuating offshore oil facilities, and since then, nine refineries that process nearly 2.9 million bpd of oil, and account for about 15% of US refining were shutting down.
However, last week, refinery crude runs rose by 225,000 bpd last week, while utilization rates rose 1.1 percentage points to 82% of total capacity, their highest since March.
Petrol stocks fell by 4.6 million barrels, compared with analysts' expectations for a 1.5 million barrel-drop.
"It's a bullish report for crude oil, no doubt," said John Kilduff, partner at Again Capital LLC in New York. "Next week we will see a hit from refined products due to the hurricane. Some refiners are coming into a full shutdown ... Usually they try to run at minimal rates but it takes a while to come out of a cold shut." – Reuters
