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US Crude Flat Despite Big Weekly Drop in Domestic Stockpiles

August 30, 2017 at 16:56 by Andrew Moran

US crude is trading relatively flat, while Brent is deep in the red. Oil investors have been primarily unfazed by the large weekly decline in domestic crude supplies and gasoline stockpiles. As Hurricane Harvey continues to linger over Texas, oil prices are piling on the losses.

October West Texas Intermediate (WTI) crude futures rose $0.08, or 0.17%, to $46.52 per barrel at 16:39 GMT on Wednesday on the New York Mercantile Exchange. US crude prices have been trading in the $45 to $50 range for much of August.

Brent, the international benchmark for oil prices, is falling midweek. October Brent crude futures tumbled $0.63, or 1.21%, to $51.37 a barrel on London’s ICE Futures exchange.

According to the US Energy Information Administration (EIA), domestic crude supplies decreased 5.4 million barrels for the week ending August 25, which is more than the initial forecasts of 1.5 million barrels. US oil production dipped by 12,000 barrels per day (bpd) to 9.07 million bpd.

The EIA further reported that gasoline stockpiles were unchanged and distillate stockpiles jumped 700,000 barrels. Experts note that the report does not reflect the aftermath of Hurricane Harvey. Next week’s EIA report will provide a clearer picture of the state of the nation’s oil activities.

The oil industry is still reeling from the effects of Harvey. Reuters reported that US refineries with output of 4.2 million bpd were offline, which accounts for close to one-quarter of US production. Officials say that it could take more than a week for refinery plants to return to normal. Meanwhile, Goldman Sachs says that up to 1.4 million bpd of US crude output has been disrupted, representing 15% of total production capacity.

Investors are continuing a trading pattern identified as crack spread buying. This is when traders sell crude oil and buy refined products like gasoline, which is surging another 5% on Wednesday.

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