Oil prices fell Thursday as concerns over a hurricane headed for the coast of Texas outweighed improving data on U.S. stockpiles and reports that the global oil cartel will consider extending a deal to cut back global supply.
Light, sweet crude for October delivery settled down 98 cents, or 2%, to $47.43 a barrel on the New York Mercantile Exchange, closing at a one-week low. Brent, the global benchmark, fell 53 cents, or 1%, to $52.04 a barrel.
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The National Weather Service upgraded Tropical Storm Harvey to a hurricane on Thursday, and crude prices dropped as refiners in Corpus Christi shut down operations. Meanwhile, gasoline prices rallied, closing up 2.8% at $1.6641 a gallon on concerns for supply disruptions.
Hurricane Harvey would be the first hurricane to hit Texas since the U.S. Gulf became a major exporter of refined products and crude, said Olivier Jakob, head of Swiss consultancy Petromatrix.
"A hurricane causing damage to the refinery infrastructure of Texas would have today a much greater international impact than in previous tropical weather events," Mr. Jakob said.
Refiner demand for crude has helped draw down stockpiles in recent months, helping fuel a rally in the market. However, a halt in refiners processing crude into products could lead to another build up in storage, analysts warned.
U.S. crude stocks continued to decline for the eighth consecutive week, with data from the U.S. Energy Information Administration published Wednesday showing a fall of 3.3 million barrels of crude oil in the week ended Aug 18. The decline in stockpiles was largely in line with analyst expectations on average.
But some analysts have been less optimistic on the data, especially as U.S. production has risen and refiners prepare for a period of maintenance. According to the EIA, U.S. production rose to 9.5 million barrels a day in the week ended Friday, nearing a record of 9.6 million barrels a day hit in June 2015.
"I think there's still concern. This week we showed another increase in U.S. oil production," said Kyle Cooper, a consultant at ION Energy Group in Houston.
S&P Global Platts said that although the global surplus was slowly being worked through, as shown by the U.S. stock draws, "traders already appear to be looking ahead to next month, when crude stocks typically build as refinery demand fades when units are taken offline for the fall maintenance period."
On Thursday, the Organization of the Petroleum Exporting Countries said extending production cuts past the first quarter of 2018 is still an option for the oil cartel, which has struggled to make a dent in a global supply glut, in part because of increasing U.S. shale production.
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(END) Dow Jones Newswires
August 24, 2017 18:01 ET (22:01 GMT)