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US Refinery Outages Influence Crude Oil Prices

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Updated

Crude oil futures  

September WTI (West Texas Intermediate) crude oil (IEZ) (XES) (USL) futures contracts fell 0.1% and were trading at $48.48 per barrel in electronic trading at 2:00 AM EST on August 14, 2017.

US crude oil prices are near a two-week high due to the fall in US crude oil inventories and the US refinery outage.

Higher crude oil (ERY) (IYE) prices have a positive impact on oil and gas producers. The top energy companies’ returns as of August 18, 2017, sorted by the largest volume (or shares traded), are mentioned below:

  • ExxonMobil (XOM) rose 0.5% to 76.64.
  • Schlumberger (SLB) rose 0.4% to 63.32.
  • Chevron (CVX) rose 0.5% to 106.48.
  • Halliburton (HAL) rose 0.7% to 38.9.
  • ConocoPhillips (COP) rose 0.2% to 43.11.
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US refinery outages

ExxonMobil’s crude oil refinery unit at Baytown, Texas, was shut down on August 18, 2017. It produces 560,500 bpd (barrel per day) of refined products. It’s the second-largest crude oil refinery unit in the US. Refinery outages supported crude oil and gasoline prices on August 18, 2017, which led to a wider crack spread. The crack spread is the difference between fuel and crude oil prices.

On August 17, 2017, Shell’s (RDS.A) crude oil refinery unit in Texas caught fire. The crude oil refinery unit might be closed over the next two weeks for repairs. The unit produces 325,700 bpd of refined products. Shell’s crude oil refinery unit shutting down in Texas supported crude oil prices on August 17, 2017.

Supply outage

National Oil Corporation of Libya reported that the country’s Sharara oilfield has been shut down. The Sharara oilfield has been shut down since August 19, 2017. It’s the largest oilfield in Libya. The supply outage in Libya supported Brent crude oil prices last week. Brent crude oil futures rose 1.5% last week.

US crude oil production

The EIA (U.S. Energy Information Administration) estimates that US crude oil production hit 9.5 million barrels per day for the week ending August 11, 2017. Production rose 13% since June 2016. The rise in US production pressured US crude oil prices. US crude oil prices have fallen 14.8% YTD. However, refinery and supply outages could support oil (SCO) (BNO) prices this week.

In the next part of this series, we’ll look at the relationship between crude oil and the US dollar.

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