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Goldman Sachs Expects Hurricane Irma to Hurt Oil Demand

13 September, 2017, 00:13 | Author: Priscilla Morrison
  • A worker adjusts a valve of an oil pipe in Zubair oilfield in Basra Iraq

However, Goldman said its prediction for increased fuel demand could be upset if Hurricane Irma were to make landfall in Florida where it would not be felt so much on the sparse oil infrastructure than on fuel demand. That's because Texas is home to twice the oil consumption per capita of Florida.

The report from OPEC also highlighted that production outside the group fell in August, driven by disruptions in the US after Hurricane Harvey rampaged through the oil producing regions in Texas and Louisiana.

Oil last traded above $100 a barrel in 2014, the year in which prices began to slide due to excess supply. It's likely that crude oil prices will make their third attempt and retest leading towards $ 47.50.

But many refineries along the Gulf Coast were knocked offline by the hurricane, prompting a notable rise in crude stockpiles for the week ended September 1, according to the Energy Information Administration.

The numbers, however, might not be indicative of the longer term supply demand picture, said Mark Watkins, regional investment manager at U.S. Bank.

"The recovery is well underway but the restarts are taking more time and, for some refiners, exposed more significant damage", the analysts said.

Irma knocked out power to almost 5.8 million Florida homes and businesses on Sunday after millions were told to evacuate ahead of the storm. Harvey slashed refining capacity across Texas, forcing shutdowns of key refineries from Corpus Christi and Houston to Port Arthur, including the largest USA fuel-making plant.




West Texas Intermediate for October delivery added 20 cents to $48.27 a barrel at 1:06 p.m. on the New York Mercantile Exchange.

"It is clear that the rebalancing process is under way", he said.

OPEC oil output by its 14 member countries fell in August by 79,000 barrels per day (bpd) from July to 32.76 million bpd, below a demand forecast. The producers are seeking to strengthen compliance with the reduction accord they reached past year.

On Monday, Falih and his United Arab Emirates counterpart also agreed to consider an extension beyond March 2018.

The Saudi ministry sent three separate press statements on Sunday and Monday reporting that Faleh and the three ministers agreed on keeping the expansion an option given the market's need and circumstances.

Mark Zandi, the chief economist at Moody's Analytics, said the US economy could suffer lost revenue from the storms and the estimate for third-quarter gross domestic product could drop a half point to 2.5 percent as a result.

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