Sept. 1 (UPI) -- The amount of crude oil forced into storage facilities in the United States left the short-term market lopsided and pushed major benchmarks lower early Friday.
Oil and gas infrastructure along the southern U.S. coast remains heavily impacted by the aftermath of now Tropical Depression Harvey. As much as 16 percent of total U.S. refining capacity is shut in by the storm, pipelines from the region are operating intermittently and the federal government was forced to release oil from its strategic reserves in order to offset the market strains.
Nicole Leonard, a senior project consultant at S&P Global Platts, said in commentary emailed to UPI late Thursday that production was more or less back to normal, despite the pipeline and refinery disruptions.
"The rest of the country continues to produce, as well, hence domestic crude prices are disconnecting from global prices -- WTI/Brent spread widens -- as our own domestic production gets stuck in storage terminals" she said. "Meanwhile, the United States can no longer export and over 1 million barrels per day of crude that has been exported this year remains still stuck in domestic tanks."
Leonard said that if ports remain closed and infrastructure is shown to be damaged after the floodwaters recede, it would keep crude oil prices lower because of supply-side strains.
The price for West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.34 percent at 9:20 a.m. EDT to $47.07 per barrel. Brent, the global benchmark, was down 0.17 percent to $52.77 per barrel.
Oil price soared in Thursday trading as some operations returned to normal. Vandana Hari, an industry analyst and founder of Vanda Insights, said in an emailed newsletter the storm has upended the global market because of higher imports from Europe and Asia and higher demand from other North American oil producers.
"The futures markets, struggling to assimilate and anticipate the various crude and refined product imbalances in the United States and globally, face increased volatility," she said.
Meanwhile, the U.S. economy is sending mixed signals. Second-quarter figures for gross domestic product came in at the strongest in years, though seasonal issues tend to exaggerate real gains. The U.S. Labor Department reported fewer job gains than expected in August and the number of people without a job was little changed. The average workweek in the United States declined slightly from July and hourly earnings rose 3 cents to $26.39, after climbing 9 cents in July.