Oil markets dip storm Harvey fallout; Hurricane Irma heads into Caribbean

Oil prices slipped on Wednesday as crude demand remained subdued due to the refinery closures that followed after Hurricane Harvey hit the U.S. Gulf coast 10 days ago.

Although many refineries, pipelines and ports that were knocked out by Harvey are now restarting, analysts said it will take weeks before the U.S. petroleum industry is back to capacity.

As of Tuesday, about 3.8 million barrels of daily refining capacity, or about 20 percent, was shut, though a number of the refineries were in the process of restarting. Several others were running at reduced rates, according to company reports and Reuters estimates.

Focus was also being drawn to massive Category 5 storm Hurricane Irma, which is barrelling towards the Caribbean and Florida and could knock out other refineries.

U.S. West Texas Intermediate (WTI) crude futures were at $48.58 barrel at 0528 GMT, 8 cents, or 0.2 percent, below their last settlement.

Fuel storage data due for release later on Wednesday by the American Petroleum Institute (API) and on Thursday by the Energy Information Administration (EIA) is expected to give a better view of how big Harvey`s impact was on U.S. fuel inventories, although analysts said it will take a few weeks longer to get a complete picture.

In international oil markets, Brent crude futures dipped 19 cents, or 0.4 percent, to $53.19 a barrel.

Meanwhile, Hurricane Irma churns towards Caribbean islands and the United States.

"With another hurricane threatening to hit the U.S. coast, traders still remain cautious," ANZ bank said on Wednesday.

Around 250,000 barrels of daily refining capacity in the Dominican Republic and Cuba lies in the immediate path of Irma, Thomson Reuters Eikon data showed, with several tankers seen on satellite images changing their routes to avoid the storm.

"Maximum sustained winds are near 185 mph (295 km/h) with higher gusts. Irma is an extremely dangerous Category 5 hurricane ... Irma is forecast to remain a powerful Category 4 or 5 hurricane during the next couple of days," the U.S. National Hurricane Center (NHC) said.

There is also another tropical storm on Irma`s heels in the Atlantic, and another one active in the Gulf of Mexico.

Longer-term, the oil industry outlook is for ample supplies and low prices as crude output remains high among the three biggest producing regions: Russia, the Middle East, and North America.

Russian Energy Minister Alexander Novak said on Wednesday he expected the 2018 price of Brent crude to be in the range of $45 to $55 per barrel.

Analysts said oil companies had adjusted to lower prices by cutting costs and thanks to improved refinery margins.

"The oil majors are looking more comfortable at lower oil prices, posting strong quarterly results in Q2 despite weaker upstream revenue," BMI Research said in a note.

(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)