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OIL AND GAS
Tropical storms continue to sway as markets upended
by Daniel J. Graeber
Washington (UPI) Sep 8, 2017


Hurricanes upending American energy markets
Washington (UPI) Sep 8, 2017 - Lingering and potential threats from hurricanes off the southern U.S. coast are testing everything from gasoline supplies to oil production, analysis finds.

Hurricane Irma is a Category 4 storm expected to make landfall on southern Florida by Saturday afternoon. It follows Hurricane Harvey, which made landfall in south Texas in late August and forced several refineries and production centers offline.

A snapshot of the market impact from the hurricanes emailed from commodity pricing group S&P Global Platts found several terminals in the Caribbean were down because of Irma. Buckeye Partners closed a facility in Puerto Rico earlier this week, sidelining about 4.6 million barrels of storage capacity. The company is just one of a handful shutting down operations as Irma makes its way north toward the Florida coast.

With no refineries of its own, Florida depends on offshore shipments for nearly all of the delivery of its refined petroleum products and the U.S. Coast Guard is expected to shut some of those ports ahead of the storm. According to GasBuddy.com, which monitors local retail markets, as many as 40 percent of the service stations in some parts of Florida are without gasoline.

Florida Gov. Rick Scott directed state police to escort fuel delivery trucks to hurricane evacuation routes. Emergency contractors, meanwhile, have secured 1.5 million gallons of fuel and the state is working to explore additional options for port deliveries.

For Texas, refineries and producers are starting to return to service after Harvey. Platts estimates about 6 percent of the total U.S. refining capacity is still down because of the impact and some producers in the Eagle Ford shale basin in Texas said Harvey has impacted operations by "a pretty significant extent."

Hurricane Katia, a Category 1 storm, is moving inland toward Mexico's eastern shore and could make landfall early Saturday morning. Platts reported that Katia could impact Mexico's port loading activity. Eastern Mexico consumes about one third of the nation's total gasoline and a quarter of its diesel and about three quarters of its supplies enter the country through ports on the Gulf of Mexico.

Prices for major oil benchmarks diverged early Friday as hurricanes in North America continued to sideline storage and production facilities.

An emailed market report from London oil broker PVM said Hurricane Irma was the "obvious" center of market attention on Friday morning. The U.S. National Hurricane Center said Irma had weakened from a Category 5 storm to Category 4 and moving northwest through the central Bahamas toward Florida. Current models show Irma making landfall in Florida by Sunday morning and soaking parts of the area with about a foot of rain.

Gasoline shortages are already reported ahead of the storm. GasBuddy.com, which monitors prices at the retail level, reported about 40 percent of the service stations in the Miami area were out of fuel. Florida Gov. Rick Scott ordered police escorts for fuel deliveries to stations along evacuation routes and the state was exploring its options for port deliveries ahead of Irma's impact.

"The devastating impact of the strongest Atlantic storm has already been felt in the Caribbean and Irma is expected to make landfall in Florida on Sunday," PVM's report read. "Gasoline sales in the Miami-Fort Lauderdale area are five times higher than the average."

Anadarko Petroleum, one of the largest operators in the U.S. Gulf of Mexico, said it pulled non-essential staff from its platforms in the eastern Gulf of Mexico as a precautionary measure against Irma. Production has not been impacted, however.

British energy company BP, meanwhile, already evacuated staff from two of its offshore platforms. Production wasn't impacted, the company said it has enough supplies to meet the needs of its wholesale customers, "but we expect intermittent terminal supply outages and will continue working to locate alternate supplies of gasoline, diesel and other refined fuels as needed."

The threat from weather events is a repeat of the market imbalance triggered by Hurricane Harvey, which hit Texas in late August. About 6 percent of the total U.S. refining capacity is still down and oil is filling up in storage facilities as a result.

Oil prices were mixed early Friday, with West Texas Intermediate, the U.S. benchmark for oil, pulling further away from Brent as U.S. oil remains in storage. WTI as of 9:27 a.m. EDT was down 0.1 percent to $49.04 per barrel. Brent was up 0.42 percent to $54.72 per barrel.

West Texas Intermediate is still trading in the October contract, while Brent moved into November.

Igor Sechin, the head of Russian oil company Rosneft, said the decline in the value of the U.S. dollar was skewing the market.

The value of the dollar influences internationally traded commodities like gold and crude oil. When the value falls, commodity prices increase because more dollars are required to purchase the same quantity as when the value was higher. U.S. crude oil exports are up 9.5 percent from the same period last year as Brent remains more expensive than U.S. barrels.

OIL AND GAS
Oil tied to South Sudan and U.S. sanctions
Washington (UPI) Sep 7, 2017
The U.S. Treasury Department announced sanctions against officials in South Sudan, including those accused of inciting civil war and funding arms with oil. South Sudan gained independence from Sudan 2011, but has been mired in conflict described by the United Nations as an ethnic-cleansing campaign since 2013. Rivaling the genocide in Rwanda in 1994, around 1 million South Sudanese fled ... read more

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