Oil prices down as traders determine USA hurricanes impact

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Domestic crude production recovered sharply by 6.5% on the week at 9.35mn bpd following the 7.9% decline the previous week as production restarted following hurricane Harvey.

Experts also say, however, USA stockpiles data may not give a full picture in coming weeks because of Hurricanes Harvey and Irma. Refinery utilization rates slumped to 79.7% of total capacity, the lowest since 2010.

US crude settled up more than 1% on Monday, paring some of its huge discount to global oil benchmark Brent, as Hurricane Irma's initial damage on the domestic oil industry look more contained than thought. But as refineries gear up for a return, oil prices could find support and product prices could start to see a correction.

"Depending on the pace of recovery for the USA refining industry post-Harvey, very soon OECD product stocks could fall to, or even below, the five-year level", the IEA's report read.

Though the largest U.S. refinery, Motiva Port Arthur, and a number of others were resuming operations more than two weeks after Hurricane Harvey steamrolled through the U.S. Gulf coast, the impact from Irma was less supportive of oil prices. All major reporting agencies, Organization of the Petroleum Exporting Countries (OPEC), The Energy Information Agency (EIA) and the International Energy Agency (IEA) are reporting that we are seeing more demand and supply, which should set the stage for an end of year rally especially when we go full-scale recovery phase in the storm impacted areas.

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The US and South Korea should "immediately stop the deployment process and withdraw relevant equipment", Geng said. The official also refuted criticism that the administration has been inconsistent on the THAAD deployment.

It stated that: "OECD growth has performed better-than-anticipated in the current year - particularly the Euro-zone and to some extent in the USA - and is now forecast to grow by 2.2 per cent in 2017 and 2.0 per cent in 2018". For 2018, the IEA is predicting growth of 1.4 mb/d, or 1.4 per cent.

Saudi Arabia and Venezuela, both members of Opec, agreed to consider prolonging production cuts "beyond the first quarter of 2018, if needed", the Saudi ministry said.

The Gulf of Mexico's production also dropped by 70,000 bbl/d from July, averaging 1.6 MMbb/d for August. Output also dropped in Iraq. At the same time, "there has been a fair bit of OPEC rhetoric in the market the last few days of potentially extending cuts and focusing on reducing exports, which would all be positive".

Some bearish investors are saying the OPEC data was not a true assessment of production because the numbers were lowered by unrest in Libya which contributed the country's 112,300-barrel decline in August's production. Compliance to output cuts improved from 84% in July to 89%. USA supplies increased 5.9 million barrels in the past week, the Energy Information Administration reported Wednesday morning.

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