Oil Prices Set To Rise as Supply-Demand Gap Closes Up

Oil Prices Set To Rise as Supply-Demand Gap Closes Up

Oil Prices Set To Rise as Supply-Demand Gap Closes Up

Brent oil, the global crude benchmark, was down $1.07, or 2 percent, at $50.93 a barrel at 1:45 p.m. EDT (1745 GMT). The discount for U.S. WTI versus Brent reached $5.92 a barrel on Tuesday, its widest in more than two years.

The Energy Information Administration reported a bigger-than-expected weekly drop in USA crude supplies, but gasoline stockpiles were flat and traders expect next week's government report to reveal the impact of Hurricane Harvey-related crude production and refinery shutdowns.

Crude oil prices continued to lose ground because of the fallout from Tropical Storm Harvey, though prices may be supported by tensions over North Korea.

US gasoline futures jumped 4 percent to settle at 1.7833, the highest in more than two years.

Energy information provider S&P Global Platts said in a report Wednesday that roughly 2.33 million barrels per day of Texas's refining capacity was still shut down. Prices earlier climbed to the most since July 31, 2015, at $1.842. Oil prices need a so-called Goldilocks number - one that's not so high that it stimulates robust production and not so low that it stymies the industry - and US operators are reacting as the market remains stuck near the $50 per barrel level. "We're setting up and gearing up for the next couple years", FEMA's Brock Long said today.

The biggest refinery in the United States is Exxon's Beaumont facility and it's now completely shut down.

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The church also circulated photos showing that parts of the site, including the hallways and parking lot, were badly flooded. The rep also sent us photos of "initial flooding" within the church, and says this is "why we couldn't open initially ".

Some refineries were preparing for restarts, but heavy rains were expected to last through Wednesday, adding to catastrophic flooding.

The National Weather Service warned that rainfall may exceed a record-breaking 50 inches in areas around Houston.

Spot earnings for medium range (MR) tankers in the US Gulf may take a hit if refineries along the Texas coast remain shut in the wake of Hurricane Harvey.

The storm caused the closure of many oil platforms in the Gulf, and about a fifth of the region's oil output remained shut down, according to USA authorities. The API reported that oil reserves in the country for the week ended on August 25, decreased by 5.78 million barrels, to 457.42 million barrels.

Crude markets were also looking at disruptions in Libya and Colombia. Yet crude remains in ample supply.

"We are thus lowering our Brent oil price estimates to $55 per barrel from $60 per barrel in 4Q17 (and) to $57 per barrel from $64 per barrel in 2018", Jefferies bank said.

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