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Risk premium may be waning for oil prices
by Daniel J. Graeber
Washington (UPI) Oct 17, 2017

U.S. retail gas market in post-hurricane recovery mode
Washington (UPI) Oct 17, 2017 - Barring a few select markets, most U.S. drivers are seeing a decline in gas prices as the energy sector recovers from recent hurricanes, market analysis found.

Motor club AAA recorded a national average retail price for regular unleaded for Tuesday at $2.47 per gallon, a fraction of a percent lower than last week and 6 percent, or 16 cents per gallon, less than one month ago.

AAA spokesperson Jeanette Casselano said demand nation-wide is starting to wind down from the strains of the travel-heavy summer, while the refineries and pipelines idled by recent hurricanes in the U.S. south are starting to return to normal.

"Drivers will see stabilized or decreasing prices at the pump throughout this month due to high refinery production rates and seasonal demand," she said in a statement.

Hurricane Harvey, which moved over the large density of refineries in the southern United States, helped drive gas prices to $2.67 per gallon last month, their highest price for the year. AAA said inventory levels for gasoline are still lower in the region, though some states are catching up with national trends. Florida gas prices are about 2 percent lower than last week.

The Great Lakes region, the most volatile market in the country, was the only region to post a decline in gasoline inventory levels and, as a result, recorded the largest spike in retail gasoline prices. In terms of percent, Michigan had the largest price increase from last week at 4.6 percent to post a state average Tuesday of $2.50 per gallon. Swings in demand and fluctuations in response to the hurricanes in part led to the regional price increase.

The West Coast market, meanwhile, remains the most expensive, with California taking the top honors for the Lower 48 with a state average of $3.04 for Tuesday. AAA said, however, that the market is relatively stable as gasoline inventories swell.

The federal government said it expected a national average retail price for gas in October of $2.49 per gallon and $2.33 per gallon by the end of the year.

Disruptions to U.S. oil production from Hurricane Nate may support a risk-fueled rally in oil prices Tuesday, but concerns about global outages may be fading.

Crude oil prices soared during the Monday session as tensions boiled over in the northern provinces of Iraq. Iraqi and Kurdish forces are sparring over control of the so-called disputed territories in the north and by Tuesday, the Iraqi military had taken the oil fields in Kirkuk.

The Organization of Petroleum Exporting Countries said in a market report published before fighting intensified that geopolitical tensions over the September referendum for independence in the Kurdish north had already added a risk premium to the price of oil.

Citing sources close to an Iraqi oil company working in the north, commodity pricing group S&P Global Platts reported that any disruptions to the flow of oil to a Turkish seaport on the Mediterranean Sea would be temporary. Both Kurdish and Iraqi energy ministers said that, even though tensions are high, there shouldn't be any major disruption to the flow of oil.

The price of oil was moderating after a strong rally in the previous session. The price for Brent crude oil, the global benchmark, was up 0.33 percent at 9:20 a.m. EDT to $58.10 per barrel. West Texas Intermediate, the U.S. benchmark, was up 0.1 percent to $51.91 per barrel.

U.S. President Donald Trump's recent decision to back away from a multilateral nuclear agreement with Iran gave support to crude oil prices last week. By late last week, Hurricane Nate had idled as much as 20 percent of the oil production capacity in the U.S. Gulf of Mexico, though operations were returning to normal by Monday.

Platts estimates that federal U.S. data will show a decline in crude oil inventories of 3.9 million barrels. That matters for traders looking for the return of an elusive balanced market.

Geoffrey Craig, an oil futures editor for Platts, said in an emailed report on inventories the decline in the United States was temporary.

"One of the most recent catalysts for inventory reduction -- a sharp reduction in Gulf of Mexico production -- proved temporary, as output nearly recovered in full by the end of last week, given that no real damage was reported to oil infrastructure following recent hurricanes," he said.

The American Petroleum Institute publishes its own data on crude oil inventories late Tuesday. Federal data are published midway through the morning on Wednesday.

More drilling expected in the North Sea; No disruptions from Ophelia
Washington (UPI) Oct 16, 2017
The Norwegian government said Monday it signed off on new plans for oil drilling and exploration work in the national waters of the North Sea. The Norwegian Petroleum Directorate said it gave Statoil approval to drill an exploration well in the shallow waters of North Sea. Drilling starts in November and will run for about 99 days, depending on whether or not the company makes a discove ... read more

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