Oil prices were near flat on Wednesday as investors digested Hurricane Idalia’s path and its effect on fuel demand, while US government data showing tighter-than-expected crude supplies limited losses.
Brent crude futures for October fell 3 cents to $85.46 a barrel by 12:40 pm EDT (1640 GMT). The October contract expires on Thursday and the more active November contract was at $84.94, up 3 cents.
US West Texas Intermediate crude futures gained 12 cents to $81.28.
Both benchmarks rallied by more than a dollar on Tuesday as the US currency weakened after soft U.S. jobs data reduced the likelihood of further increases to interest rates.
Investors had an eye on Hurricane Idalia, which came ashore as a Category 3 storm on Wednesday morning in a Florida region where the state’s northern panhandle curves into the Florida Peninsula. By midday Wednesday, the hurricane approached southeastern Georgia as a Category 1 storm.
“Right now in the current track, there are concerns that the storm is going to skirt the coast of Georgia and South Caroline, and that’s renewing concerns of demand destruction,” said Price Futures Group analyst Phil Flynn.
In US supply, crude inventories fell by 10.6 million barrels in the last week to 422.9 million barrels, Energy Information Administration data showed on Wednesday. Analysts in a Reuters poll expected a 3.3 million-barrel drop.
Product supplied of finished motor gasoline – a proxy for demand – was at about 9.1 million barrels per day.
“I would expect (gasoline demand) to fall precipitously from here,” said John Kilduff, a partner at Again Capital, as gasoline demand typically peaks in the summer driving season.
Elsewhere, analysts expect Saudi Arabia, the world’s biggest oil exporter, to extend its voluntary output cut into October, keeping oil supply tight.
Based on that expectation, refining sources surveyed by Reuters forecast that Saudi Arabia’s official selling prices for all crude grades sold to Asia in October will be raised to their highest this year.
Meanwhile, the military seized power in Gabon on Wednesday, which could hit the country’s crude supplies and tighten the market further. Gabon exported a monthly average of 160,000 barrels per day to Asia from May to July, Kpler ship-tracking data showed.
Oil’s gains were capped, however, by concern over the mixed economic situation in China, the world’s biggest oil importer.
Despite production cuts from Saudi Arabia, Russia and others, other exporters like Venezuela and Iran are filling some of the gap, said Ole Hansen, head of commodity strategy at Saxo Bank.
“Ongoing demand concerns may prevent prices from having a sustained move above $90,” he said.
(Source: Reuters)
