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Oil mixed amidst Irma demand fears, Saudi cut extension talks

Oil mixed amidst Irma demand fears, Saudi cut extension talks

Oil prices dropped on Monday on concerns that Hurricane Irma's pounding of heavily populated areas of Florida could dent oil demand in the world's top oil-consuming nation. More recently Hurricane Irma left more than seven million homes without electricity in Florida. It gradually lost strength and weakened to a tropical storm by Monday morning as it headed toward Georgia.

The price for Brent crude oil was up 0.46 percent at 9:18 a.m. EDT to $54.13 per barrel.

Oil production by OPEC fell 0.24%, or 79,000 barrels per day, in August to 32.7 million barrels produced per day.

Separately, analysts polled by Reuters expected USA crude stocks to have risen by 2.3 million barrels last week while those surveyed by Bloomberg expected a build of 4.9 million barrels.

Prices received additional support amid reports that Saudi Arabia's oil minister discussed possibly extending a pact to cut global oil supplies beyond March 2018 with his Venezuelan and Kazakh counterparts.

"The oil market reacted to the Saudi talks", said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting told Reuters.

"It is clear that the rebalancing process is under way", he said.

Meanwhile, U.S. President Donald Trump said North Korea would regret escalating recent nuclear tensions, but added that a military option wasn't inevitable.

Markets will be influenced later in the day when the U.S. Energy Information Administration releases its short-term market report, which includes forecasts for crude oil prices.

"The drop in United States oil refining is also to be offset by higher processing at other nations, so worries over a substantial cut in crude oil demand are fading". A quarter of US refining capacity to be taken off-line due to the hurricane, sapping demand.

"Over the next two to three weeks, the EIA inventory numbers will be rather sloppy because you have production disrupted, refineries going offline and online", he said, noting that OPEC figures are a better signal of market stabilization, "That's why you have to look out further".

OPEC and other major oil producers such as Russia, Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan, and South Sudan reached an agreement in December 2016 to remove 1.8 million barrels a day from the market.

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