Oil set for first weekly gain since July as U.S. refiners return

Oil set for first weekly gain since July as U.S. refiners return

U.S. West Texas Intermediate (WTI) rose 40 cents, or around 0.9%, to $47.88 a barrel by 3:10AM ET (0710GMT).

Brent crude, meanwhile, followed WTI lower, but losses for the global benchmark were most modest, a day after prices settled at their highest level since mid-April.

Late in the week, oil futures traded mixed, with Brent rising to a 5-1/2 month high while USA crude slipped on a bigger-than-expected crude stock build as the restart of US refiners after Hurricane Harvey was countered by the threat of Hurricane Irma.

"Irma looks like it will miss the key Gulf areas, and we're more anxious about shale", said Mark Watkins, regional investment manager at U.S. Bank.

Analysts said oil prices fell as a result of low refining activity following Harvey, which sharply reduced demand for crude oil.

USA crude production output fell nearly 8 percent because of Harvey, from 9.5 million barrels per day (bpd) to 8.8 million bpd, according to the Energy Information Administration (EIA).

Oil prices pulled apart by the US and global impacts from severe weather that pounded the USA coast over the last couple of weeks. That was the biggest plunge since September 2005 after Hurricanes Katrina and Rita, according to Richard Hastings, macro strategist at Seaport Global Securities.

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Post-storm recovery and rebuilding are expected to increase demand for oil in a few months - but in the short term, hurricane season is making for rocky times in the energy industry.

Igor Sechin, the head of Russian oil producer Rosneft, said a decline in the value of the USA dollar was having a greater market impact than the effort by the Organization of Petroleum Exporting Countries to balance the market with coordinated production declines.

The reality is that we are far from an oil shortage - in fact, we are still in the midst of what most call a supply glut.

Meanwhile, Saudi Arabia-the world's largest exporter of crude oil-said Sunday that the country's energy minister and his Venezuelan counterpart had discussed the possibility of extending OPEC's oil output cut deal beyond the March 2018 expiration date. Analysts will be looking to see if the IEA adjusts its demand estimates.

The Organization of the Petroleum Exporting Countries, of which Saudi Arabia is the largest member, and 10 other producers including Russian Federation first agreed late previous year to cap their production at around 1.8 million barrels a day lower than October 2016 levels.

Among refined products, Nymex reformulated gasoline blendstock-the benchmark gasoline contract-was down 0.8%, at $1.65 a gallon. It is down about 5% for the week.

Harvey has been a real wrench in the oil market, creating volatility and big intraday swings.

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