Oil prices pared losses to trade around unchanged after U.S. data showed that oil stockpiles rose and gasoline stockpiles fell after Harvey hit the Gulf Coast, as analysts had anticipated.
The U.S. Energy Information Administration reported that inventories of crude oil surged higher by 4.6 million barrels as refineries were forced to cut back sharply. That is largely what analysts were expecting after Harvey hit Texas as a Category 4 hurricane and lingered over the area, causing unprecedented flooding that forced several refiners to shut down fuelmaking operations.
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U.S. crude futures were down 1 cent at $49.15 a barrel on the New York Mercantile Exchange. Brent crude was up 16 cents, or 0.3%, at $54.36 a barrel on ICE Futures Europe.
"It begins to reflect the impact of hurricane Harvey on Gulf Coast refiners," said Andy Lipow, president of Lipow Oil Associates.
The EIA data showed that refinery utilization fell by nearly 17 percentage points to 79.7% of capacity.
Still, analysts said Thursday's data likely isn't the final word on Harvey's impact. The builds in oil stocks could continue in the coming weeks, Mr. Lipow said. "There's still a significant amount of refining capacity in the midst of starting up," he said.
Gasoline stockpiles fell by 3.2 million barrels, compared to the 5.7 million barrel drop that analysts surveyed by The Wall Street Journal were expecting. That may be limiting crude's gains, but Mr. Lipow said he expects sharper draws may be reflected in data in the coming weeks.
Gasoline futures fell 1.96 cents, or 1.17%, to $1.6537 a gallon. Diesel futures rose 1.66 cents, or 0.94%, to $1.7761 a gallon.
Oil prices have climbed this week as some U.S. Gulf Coast refineries restarted operations, boosting demand for crude, after Harvey brought a chunk of the country's refining industry to a halt at the end of August.
"One of the impacts of the hurricane and the related refinery shut-downs is a fall in product inventories and a rise in crude stocks," said Tamas Varga at brokerage PVM.
Traders and analysts surveyed by The Wall Street Journal expect on average to see U.S. gasoline stockpiles to have fallen by 5.7 million barrels and distillate stockpiles to be down 3.5 million barrels in the week ended Sept. 1.
Oil inventories are expected to have risen by 5 million barrels due to the slowdown in demand caused by disruptions to refineries.
Industry group the American Petroleum Institute reported Wednesday that U.S. crude supplies rose 2.8 million barrels for the week ended Sept. 1, but that gasoline stockpiles fell by 2.5 million barrels.
Investors were also monitoring the development of tropical storm Irma which is heading towards Florida, a state which unlike Texas doesn't have refineries, but where oil demand could be affected.
"The issue in relation to the oil market is not so much the ability to produce or refine, but simply the possibility that consumer behavior at the pump will veer towards precautionary buying, I wouldn't be surprised if you have long queues at gas stations and the possible development of shortages in some areas," said Harry Tchilinguirian, head of commodity strategy at BNP Paribas.
Analysts noted the official end of the U.S. driving season on Monday marks the seasonal drop-off in gasoline demand which could put downward pressure on oil prices.
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(END) Dow Jones Newswires
September 07, 2017 13:15 ET (17:15 GMT)