Traders are said to be still assessing the impact of Harvey and Irma. File Image / Pixabay
With Hurricane Irma pummeling Florida but not as severely as expected and Texans still picking up the pieces in the wake of Hurricane Harvey, crude continued its mediocre market performance on Monday, with West Texas Intermediate up 59 cents to $48.07 and Brent climbing 6 cents to finish at $53.84 per barrel.
Harry Tchilinguirian, global head of commodity markets at BNP Paribas, said hurricanes virtually ensure "a lot of volatility in the numbers" and that the market is still determining the extent of Harvey's damage on oil refineries
As expected, Irma is shaping up to have far less influence than Harvey: Goldman Sachs said the negative impact on oil demand from the latest hurricane will be smaller "because Texas has twice the oil consumption per capita of Florida given the significant concentration of refining and petrochemical capacity on the U.S. Gulf Coast."
Osmar Abib, global co-head of oil and gas, Credit Suisse
I don't think you're going to see stockpiles going down in the near term
Osmar Abib, global co-head of oil and gas at Credit Suisse, told Bloomberg television that while a lot of recovery still lies ahead for Texans, Harvey "will certainly cause a period of transition because it's going to take some time to repair a lot of [infrastructure and operational efficiency], so I don't think you're going to see stockpiles going down in the near term."
All but forgotten are the dire warnings by many analysts that the storms could cause a prolonged suspension of U.S. refining capabilities, thus causing skyrocketing prices; the same was said to be the inevitable consequence of Saudi Arabia's conflict with Qatar, and news related to that issue will presumably cause these predictions to resurface.
The Saudis over the weekend broke off dialogue with Qatar just as it seemed a breakthrough in the dispute was at hand; following Qatar state news agency QNA stating that both parties were willing to assign two envoys to "resolve controversial issues", Saudi Arabia issued a statement: "What was published on the Qatar News Agency is a continuation of the distortion of the Qatari authority of the facts.
"The Kingdom of Saudi Arabia announces the suspension of any dialogue or communication with the authority in Qatar until a clear statement is issued clarifying its position in public."
Sailing blithely through the gloom and doom once again is Russia: over the weekend Igor Sechin, chief executive for Rosneft, revealed that his company plans to export a record 40 million tonnes of crude oil to China this year, considerably more than an earlier calculation of only 31 million tonnes.
Prior to Harvey and Irma, analysts spent the summer focusing on the many ways geopolitical risk could wreak havoc on the market; in general, they agreed that the Saudi/Qatar conflict, increasing strife in Venezuela, and Chinese production collapsing could cause a sudden tightening and oil to skyrocket to $80.