Oil prices edged lower Friday as the shutdown of several refineries in the wake of tropical storm Harvey suppressed demand.
Light, sweet crude for October delivery fell 10 cents, or 0.2%, to $47.13 a barrel on the New York Mercantile Exchange, down four out of the past five sessions. Brent, the global benchmark, was trading near flat at $52.85 a barrel.
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Prices have come under pressure this week after Harvey made landfall in Texas as a Category 4 hurricane and was then downgraded to a tropical storm, dousing the coast with rain and flooding. While the storm disrupted some crude production, the industry expects a bigger impact on demand as refiners shut down or reduced operations.
"Harvey's impact continues to be the key short-term factor that the market is keeping an eye on, with a significant reduction in refinery operations curtailing oil demand," Robbie Fraser, commodity analyst at Schneider Electric, said in a Friday report.
According to the Energy Department, 10 refineries in the Gulf Coast region were shut down as of Thursday afternoon, nearly 17% of total U.S. refining capacity. However, some refiners have announced plans to restart facilities in the coming days, easing concerns of a fuel shortage.
"There's a lot of doom and gloom out there about their ability to come back from this, but in my experience, they come back a lot more quickly than people realize," said John Kilduff, founding partner at Again Capital. "The anxiety yesterday hit a crescendo and today we're seeing it get dialed back."
On Friday, gasoline prices pulled back after hitting a two-year high. Futures for October delivery were recently down 2.8% at $1.7289 a gallon on the New York Mercantile Exchange. Diesel prices fell 0.5% to $1.7341 a gallon.
"Indications that a couple of Texas ports could be reopening and a couple of pipelines out of the Houston region could be stepping up flows is contributing to some profit taking across the energy spectrum today," Jim Ritterbusch, president of Ritterbusch & Associates, wrote Friday in a research report.
With a key source of crude demand on hold, analysts and traders expect the amount of crude oil in storage to pile up over the next few weeks, reversing a trend that ignited hope a global rebalancing in the oil market was gaining traction.
As traders continue to assess the damage done in Harvey's aftermath, the market will once again turn its attention to the Organization of the Petroleum Exporting Countries, analysts said. The global cartel has struggled to mitigate a global supply glut as U.S. shale has increased production following OPEC's decision to curtail output.
--Marina Force contributed to this article.
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(END) Dow Jones Newswires
September 01, 2017 11:44 ET (15:44 GMT)