Saudi Arabia open to another OPEC cuts extension

Posted September 13, 2017

Oil edged higher for a second day as OPEC was said to consider keeping production caps in place beyond their March expiration and USA crude refiners accelerated their post-hurricane recovery.

Expectations for a hefty weekly rise in US crude-oil supplies limited the price rise for oil, however.

Hurricane Harvey disrupted refinery production in Texas last month-one reason USA crude futures have been lower than the global benchmark.

The post-storm recovery is likely to bring oil demand to a higher level over the next several months, the firm said, helping to gradually offset the negative initial impact.

But many refineries along the Gulf Coast were knocked offline by the hurricane, prompting a notable rise in crude stockpiles for the week ended September 1, according to the Energy Information Administration.

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"Over the next two to three weeks, the EIA inventory numbers will be rather sloppy because you have production disrupted, refineries going offline and online", he said. The refineries restarted but still capacity is down by more than 2 million barrels.

The hurricane knocked out power to almost 4 million homes and businesses in Florida on Sunday. Harvey slashed refining capacity across Texas, forcing shutdowns of key refineries from Corpus Christi and Houston to Port Arthur, including the largest USA fuel-making plant.

West Texas Intermediate for October delivery added 20 cents to $48.27 a barrel at 1:06 p.m. on the New York Mercantile Exchange.

"Irma will have a negative impact on oil demand but not on oil production or processing".

Opec and other producers including Russia, Mexico and Kazakhstan pledged to reduce output by about 1.8 million barrels a day to eliminate a global surplus that was weighing on prices. The producers are seeking to strengthen compliance with the cuts accord they reached a year ago.

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"The oil market reacted to the Saudi talks", said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting told Reuters.

Falih met with Venezuela's Eulogio Del Pino, Kazakhstan's Kanat Bozumbayev and the United Arab Emirates' Suhail al-Mazrouei on the sidelines of an event by the Organization of Islamic Cooperation in the Kazakh capital.

Just ahead of the USA open, there were reports that OPEC would consider extending production curbs for more than 3 months which pushed WTI to just above $48.0 p/b while Brent traded just above $54.0 p/b.

-Christopher Alessi contributed to this article.

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