Oil rose for a fourth week in a row as US Gulf Coast refineries began restarting, although gains were capped as investors shifted their focus from Hurricane Laura toward the fragile rebound in consumption amid the pandemic.
West Texas Intermediate for October Delivery was little changed on Friday, dropping 0.16 percent to US$42.93, and notched a 1.61 percent gain for the week.
Brent crude for October delivery gained 0.46 percent to US$45.81. It increased 3.29 percent for the week.
Photo: Bloomberg
While Laura was one of the most powerful hurricanes to ever hit Louisiana, facilities in southeast Texas avoided the worst of the storm, allowing infrastructure there to begin the recovery process.
Among those facing more extensive repairs, Citgo Petroleum Corp said that its refinery in Lake Charles, Louisiana, sustained damage from high winds and likely would not see an immediate restart.
Despite the hiccup in production, US gasoline stockpiles remain at their highest seasonal level in decades.
“Gasoline demand is still low, inventories are high” as the pandemic persists, said Michael Hiley, head of over-the-counter energy trading at New York-based LPS Futures. “So if there ever was a time where we could tolerate losing some refining capacity, it would be now.”
Refining margins for combined gasoline and diesel jumped 12 percent on Friday due to refinery closures in Southeast Texas and Louisiana because of Laura.
The pace of COVID-19 infections rose further in key European countries and German Chancellor Angela Merkel said that more sacrifices lie ahead after the summer.
“The focus seems to be more on the demand front than supply at this point,” said Josh Graves, senior market strategist at RJ O’Brien & Associates LLC.
In a sign that China’s thirst for oil imports is waning, the number of supertankers hauling crude to the country slid to its lowest level since late March, ship-tracking data compiled by Bloomberg showed.
The number of very large and extra-large crude carriers signaling China in the next three months dropped by two to 79 in the past week, compared with a seasonal average of about 88 tankers.
Meanwhile, the slowdown in demand is resulting in weaker margins for producing fuels, reducing the incentive for refiners to purchase more crude.
In Europe, profit from turning crude into diesel weakened to its narrowest since June on Thursday, while that for gasoline in the US was its lowest since April.
Additional reporting by staff writer
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