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OIL AND GAS
Oil prices turn lower following Monday's surge
by Daniel J. Graeber
Washington (UPI) Sep 26, 2017


U.S. gas prices in some markets at pre-Harvey levels
Washington (UPI) Sep 26, 2017 - U.S. retail gasoline prices may slide back into seasonal declines as the refinery sector moves toward pre-Hurricane Harvey status, market reports show.

A federal report shows one refinery in the Gulf Coast region is still shut down because of the impact from Harvey and nine are operating at a reduced rate. That's a slight improvement from the weekend and a sign the sector is slowly returning to normal. According to motor club AAA, most of the retail stations in Florida, which saw severe shortages in the wake of Hurricane Irma, are well supplied.

For Tuesday, AAA reported a national average retail price for regular unleaded gasoline at $2.57 per gallon, slightly less than for Monday and about 1.8 percent lower than one week ago.

"Gas prices are getting cheaper by the day," AAA spokesperson Jeanette Casselano said in a statement. "Pump prices may not be dropping as fast as motorists would like, but with the switchover to winter-blend gasoline, consumer demand beginning to slow and Gulf Coast refineries getting closer to normal operations, consumers can expect gas prices to continue to be less expensive through October."

By region, the south and southeast states continued to post lower gas prices as the refinery sector recovers. At $2.66 per gallon, retail prices in Florida are 1.6 percent lower than last week. Gas prices in Texas moved down in parallel for a state average Tuesday of $2.45 per gallon.

The Great Lakes region is usually the most volatile in the country and that market had to make adjustments in the wake of Harvey, though a weekly jump in gasoline inventories led to big declines in gas prices. Indiana and Michigan tied for the largest declines by price, though Michigan saw the largest decline in terms of percent to move below pre-Harvey levels.

An emailed market report from GasBuddy.com, however, said the price drop was so intense that the Great Lakes market may be primed for a "reset" over the next few days.

For the West Coast, the most expensive market in the Lower 48, the increase in gasoline inventories translated to lower gas prices, though most states are still above $3 per gallon.

Crude oil prices have been on the rise more or less since Harvey made landfall. The price for Brent crude oil, the global benchmark, is up 10 percent since the start of the month. That would usually trigger more work from energy companies, though exploration and production activity in the United States remains suppressed, which is actually supporting even higher crude oil prices because it shows the market is starting to balance out. An over-supplied market last year pushed crude oil prices to historic lows. Gas prices are 16 percent higher than they were on this date last year.

Following massive gains in the previous session, crude oil prices gave up some ground in Tuesday trading, though markets still look tight.

The price for Brent crude oil surged almost 4 percent in Monday trading amid concerns about the potential market shock from a vote for independence from the Kurdish north of Iraq. About a half million barrels of oil per day moves from a pipeline in the Kurdish region to a Turkish sea port and a frustrated Ankara reminded the Kurdish government that it was the one that controlled the tap.

A geopolitical risk premium from escalating tensions between the United States and North Korea was added midway through the session after Pyongyang said it viewed some of the messages from U.S. President Donald Trump's account on Twitter as a declaration of war.

The U.S. energy sector, meanwhile, continues to recover from the impacts of Hurricanes Harvey and Irma. One refinery in the Gulf Coast region is still out of service nearly a month after Harvey made landfall, but most market indicators suggest the situation is returning to normal.

Phil Flynn, a senior market analyst for the PRICE Futures Group in Chicago, said in an emailed market report the bullish sentiment that followed the storms won't last for long.

"Oil demand will surge because of the rebuilding effort that will take place," he said. "Rebuilding entire cities will use oil and oil products like crazy and the demand destruction will be replaced with a rebuilding surge."

Puerto Rico was devastated by the impact of Irma and Hurricane Maria, which hit the U.S. island territory as a Category 4 storm.

The price for Brent crude oil was down 1.4 percent as of 9:06 a.m. EDT to $58.16 per barrel. West Texas Intermediate, the U.S. benchmark for the price of oil, was down 0.77 percent to $51.82 per barrel.

Traders will be waiting for after the market closes Tuesday to survey data from the American Petroleum Institute on supply levels in the United States. Emerging sentiment about balance, following years of oversupply, has been supportive of crude oil prices during recent sessions.

Commodity pricing group S&P Global Platts shows an expected build in crude oil inventories of 1.3 million barrels reported by the U.S. Energy Information Administration later this week and a draw on gasoline stocks of 100,000 barrels.

Geoffrey Craig, an oil futures editor at Platts, said in an emailed report the market situation is still anything but normal. Crude oil stocks usually grow this time of year because refineries shut down for seasonal maintenance.

"But the force of Harvey upended the global oil market, creating financial incentives for refiners to ramp up production instead of shutting down," he said.

For producers, Chesapeake Energy said Tuesday it revised its guidance because of the impact from Harvey. Strains should last through the third quarter, the company said.

OIL AND GAS
Shale-rich Oklahoma holds special session to address budget gap
Washington (UPI) Sep 25, 2017
Lawmakers in shale-rich Oklahoma meet Monday in a special session to help address budget strains that the governor said are critical. Gov. Mary Fallin said lawmakers are called on to find long-term solutions to budget woes. By her estimate, the state could face a $500 million shortfall next year because one-time funds were used to balance the books for the current fiscal year. Ok ... read more

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