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For oil, bigger ill Harvey, not Irma

12 September 2017

Monday's gains came as Hurricane Irma struck the USA southeast with less force than once feared, easing worries that energy demand would be hit hard.

News of the talks on Sunday helped offset downward pressure on oil prices amid worries that energy demand would be hit hard by Hurricane Irma and its aftermath.

"We believe that Irma will have a negative impact on oil demand but not on oil production or processing", Goldman Sachs analysts reported in a note.

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The firm said "given the only modest impact Harvey had on oil production, the combined demand loss generated by these two hurricanes will be a bearish shock for global oil balances in September".

Brent crude oil futures were down 13 cents, or 0.2 percent, at $53.65 a barrel at 12:17 p.m. (1617 GMT) while U.S. West Texas Intermediate crude rose by 59 cents, or over 1 percent, to $48.07. Harvey slashed refining capacity across Texas, forcing shutdowns of key refineries from Corpus Christi and Houston to Port Arthur, including the largest USA fuel-making plant.

Irma, which initially hit the Keys in Florida with winds of 130 miles per hour, knocked out power to millions of Florida customers, paralyzed tanker traffic and shut about 6,000 gasoline stations. Gasoline supplies had been crimped since late last week as several ports in Florida closed down operations fully or partially in preparation for Irma; now the flooding in different states is expected to curb demand for the transportation fuel too. 5.

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Opec and other producers including Russian Federation pledged to reduce output by about 1.8 million barrels a day through March to trim global oil inventories and buttress prices.

Saudi Arabia's Energy Minister Khalid al-Falih met his Venezuelan and Kazakh counterparts at the weekend to discuss an extension of the deal by at least three months, the Saudi energy ministry stated. The producers are seeking to strengthen compliance with the cuts accord they reached past year.

Al-Falih and Del Pino said both their countries are exceeding full conformity with their targeted production cuts and that they shared "an optimistic outlook on market fundamentals in 2018", according to a statement.

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"Both countries agreed that the option to extend the voluntary market rebalancing effort, beyond the first quarter of 2018, would be considered in due course as market fundamentals may dictate", the ministry said in a statement on Falih's meeting with Kazakh Energy Minister Kanat Bozumbayev.

For oil, bigger ill Harvey, not Irma