Crude oil prices moved higher early Friday in large part because of the shut down of operations in the southern United States and the Gulf of Mexico in response to Hurricane Harvey. File photo by Monika Graff/UPI |
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Aug. 25 (UPI) -- Crude oil prices moved higher Friday as Hurricane Harvey moved closer to the southern Texas coast and threatened production and refinery operations.
Harvey was moving close to the southern coast of Texas as a Category 2 storm, and could strengthen ahead of its expected landfall by late Friday or early Saturday. As much as 20 percent of total U.S. crude oil production is in the Gulf of Mexico and the southern coastal region is concentrated with refineries. At least five inland refineries and four production platforms offshore have been closed because of the storm.
"Hurricane Harvey has the potential to be the biggest hurricane to hit the mainland United States in 12 years, forcing several operators in the Eagle Ford [shale basin] to idle rigs and shut in some production as officials warn of floods, with a number of companies evacuating rig personnel and suspending all non-essential operations," a report emailed from RBC Capital Markets read.
Crude oil prices erased some of the gains from last week that followed a report from Baker Hughes showing a decline in U.S. exploration and production activity, but moved higher as Harvey approached the Texas coast.
The price for Brent crude oil was up 0.86 percent at 9:15 a.m. to $52.46 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.38 percent to $47.60 per barrel.
Analysis from S&P Global Platts, emailed to UPI, found about 9.5 percent, or around 167,000 barrels per day, of production in the Gulf of Mexico was sidelined by Harvey as of late Thursday morning. A morning emailed report from London oil broker PVM said Friday trading was "all about Harvey."
Elsewhere, a report emailed from JBC Energy Market found July oil demand in South Korea increased 10 percent from 2016, while Chinese imports grew about 12 percent from last year. Asian economies are expanding faster than many of their Western counterparts and supply and demand figures can have a pronounced impact on energy markets.
Markets may be impacted later in the day when Baker Hughes releases its weekly report on exploration and production trends. Reported as rig counts, a loss from the United States would indicate companies are under market pressure and push oil prices higher because it could indicate lower future production. A gain, meanwhile, would indicate confidence and possibly lead to later supply-side strains, pushing oil prices lower.
Barring any major developments, most market factors outside of Harvey will likely be muted.
