Oil prices slip on Hurricane Irma fears, Libyan supply

Oil prices slipped slightly on Thursday, although Brent crude held close to a two-month high reached in May, amid concerns on potential disruption from Hurricane Irma that has the US Gulf coast in its path.

The international benchmark grade was last trading down 0.3 percent at $54.03 per barrel (bbl). West Texas Intermediate (WTI) crude was lower by 0.2 percent at $49.05/bbl.

Hurricane Irma, rated Category-5 storm, could potentially shut down US fuel supplies even as the industry recovers from the Hurricane Harvey’s impact on the refining sector in Texas.

As of Sep. 5, at least two of the 20 refineries affected by Harvey were at “normal” run rates. The crude distillation capacity that was still offline stood at about 3.4 million barrels per day (bpd), or approximately 19 percent of the US total, according to IHS Markit data.

Hurricane Irma, meanwhile, has the potential to cause damage in the Bahamas, where Buckeye Partners L.P. (BPL) has a petroleum products storage terminal with a capacity of about 26.2 million barrels.

The storm could also impact Port Everglades in Florida, affecting crude shipments.

“In recent years, oil market participants have become used to tropical storms causing no lasting damage to the energy infrastructure,” Germany’s Commerzbank said in a note. “This may change now, prompting the market to price in something of an uncertainty premium.”

In the Middle East, Libya’s Sharara oil field is said to have resumed production, after a shutdown of nearly two weeks, Reuters reported.

Sharara, which is Libya’s largest oil field, was producing about 280,000 bpd until it was forced to close in August.

Write to Nadeshda Zareen at nadeshda.zareen@argaamplus.com