U.S. crude oil stocks rise 6.2 mln bbls in week - API

US Hurricanes Affecting Oil Prices, Saudi Could Cut Output

Oil prices rose on Monday as key USA refineries began restarts following Hurricane Harvey, which may help revive crude oil processing, while fuel prices fell as Hurricane Irma is likely to clip demand for gasoline and diesel.

OPEC and other producers, including Russian Federation, have agreed to reduce output by about 1.8 million barrels per day until next March in a bid to reduce global oil inventories and support oil prices.

Refinery use fell a further 2.0% on the week due to the continuing impact of outages as flooding caused substantial damage, although markets had been expecting a recovery in capacity use for the week. In July, OECD stocks declined by 19 million barrels to 3.02 billion barrels but stocks remain 219 million barrels above the 5-year average.

Even though the sector was able to cope, the International Energy Agency said severe weather in the United States should serve as a warning for oil markets.

Oil prices hung onto earlier gains as government data showed USA crude stocks rose sharply last week. Benchmark Brent crude has lost 6 per cent this year and was trading at $53.81 a barrel at 11.10am UAE time on Tuesday.

Traders and analysts surveyed by The Wall Street Journal expect on average to see USA oil stockpiles to have risen by 3.7 million barrels in the week ended September 8.

Hurricane Irma Regains Category 4 Strength
The Miami-Dade Police Department tweeted this morning officers are sheltered for safety and can not respond to calls for service. Mass evacuations have sent throngs onto jammed highways heading north and created a severe gas shortage in some parts the state.

Refinery crude runs fell by 424,000 barrels per day, API data showed. For Irma, the USA government eased some restrictions so that foreign-flagged vessels could help offset the market pressures in Florida and the surrounding areas.

Irma's impact on the US oil industry was also marginal, compared to the Category 5-Hurricane Harvey, which struck Texas two weeks ago, disrupting a quarter of the nation's refiners. Gasoline stocks are down by 9.8 million barrels while distillate stocks are down by 4.4 million since the end of March. Prices traded at $48.74 before the supply data.

Opec is in the midst of a deal with non-Opec producers including Russian Federation to cut production by 1.8m barrels per day until March 2018.

Expectations for a hefty weekly rise in USA crude-oil supplies limited the price rise for oil, however.

Ministers are now discussing extending the supply cut for at least three more months beyond March, before OPEC meets again in November.

Opec on Tuesday forecast higher demand for its oil in 2018 and pointed to signs of a tighter global market, indicating its production-cutting deal with non-member countries is helping to tackle a supply glut that has weighed on prices.

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