Brent crude futures were up 11 cents at $54.31 a barrel, close to their highest since May 25, while U.S. West Texas Intermediate crude futures fell 27 cents to $48.89, still near a three-week high. The continued rise in Brent crude price will further aid Nigeria economic recovery by boosting the foreign exchange market. With further increase in crude prices, the CBN will have more dollars available to oil the wheel of the economy as the external reserve will rise further.
U.S. Gulf Coast facilities were slowly recovering from the devastating effects of Harvey, which hammered Louisiana and Texas almost two weeks ago, shutting key infrastructure in the heart of the U.S. oil and natural gas industry. As of Wednesday, about 3.8 million barrels of daily refining capacity, or 20 per cent of the U.S. total, was shut in, though a number of refineries and petroleum-handling ports were restarting.
U.S. refiner Valero’s five refineries located on the Texas Gulf Coast are in the process of ramping back up, Chief Executive officer Joe Gorder said. Also affecting prices was support from a weakening U.S. dollar. Because oil is priced in the U.S. currency, a lower dollar makes it less expensive for foreign buyers. The dollar index .DXY was down 0.53 per cent. At the same time, prices were weighed down by fears that Hurricane Irma in the Caribbean could interrupt crude shipments in and out of the United States.
Irma hit Caribbean islands overnight with wind speeds up to 185 miles per hour (295 km/h) and was heading for Florida, where fuel shortages were reported as retailers struggled to keep up with demand from customers filling tanks ahead of the storm’s landfall, expected this weekend.
Another Atlantic storm, Jose, is following on Irma’s heels and has been upgraded to hurricane strength by the U.S. National Hurricane Center. Yet another hurricane, Katia, is developing in the Gulf of Mexico.
“Demand may continue to be distorted as multiple hurricanes make their way across the Caribbean,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA. In Libya, the Sharara oilfield, the country’s largest, was resuming production on Wednesday after the reopening of a valve on a pipeline shut by an armed group for more than two weeks, oil industry sources said. “The upside (to oil prices) was limited by the lifting of the force majeure of Libya’s Sharara crude oil exports,” Tamas Varga of PVM oil brokerage said.
