- U.S. Gulf refineries restarting after Hurricane Harvey
- U.S. rig count falls to lowest since June
- But analysts warn of distortions following hurricane damage
U.S. crude oil prices rose above $50 per barrel on Monday and were near last week’s multi-month highs as the number of U.S. rigs drilling for new production fell and refineries continued to restart after getting knocked out by Hurricane Harvey.
U.S. West Texas Intermediate (WTI) crude futures were trading up 41 cents, or 0.8 percent, at $50.30 by 0852 GMT, near the three-month high of $50.50 it reached last Thursday.
Brent crude futures, the benchmark for oil prices outside the United States, were at $55.91 a barrel, up 29 cents, and also not far from the near five-month high of $55.99 touched on Thursday.
“Demand forecasts from OPEC and IEA … continued to improve sentiment in the market. Refineries are also reporting a much better recovery from the recent hurricanes,” ANZ bank said on Monday.
Oil refineries across the Gulf of Mexico and the Caribbean were restarting after being shut due to hurricanes Harvey and Irma, which battered the region over the past three weeks.
Royal Dutch Shell’s Deer Park refinery in Texas was among the latest, beginning its restart on Sunday. The plant can process 325,700 barrels per day.
The refinery restarts are occurring “as signs emerge of stalling growth in the U.S. shale industry. The number of rigs drilling for oil in the U.S. fell sharply last week,” ANZ said.
U.S. energy firms cut seven oil rigs in the week to Sept. 15, bringing the total to 749, the fewest since June, energy services company Baker Hughes said on Friday.
Despite these signs of a tightening market, analysts warned that distortions from the recent hurricanes made it hard to identify more long-lasting supply and demand fundamentals.
This week’s crude inventories data will almost certainly still show the distortions of Harvey and Irma and significant increases may be looked at by traders as outlier data,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.
Hedge funds and other money managers cut their bullish bets on U.S. crude futures and options in the week to Sept. 12, the U.S. Commodity Futures Trading Commission reported on Friday.
Commerzbank said in a note on Monday that “speculative financial investors reduced their net long positions in WTI by 15,600 contracts,” warning that “because most of the latest price rise only happened after this, it is not yet reflected in the data.”