Oil markets could receive another blow on Wednesday when the U.S. government reports oil stocks data that are expected to show a build in crude oil stocks, largely as a result of Hurricane Harvey damaging U.S. oil refineries in late August.
In a preview of the U.S. Energy Information Administration's (EIA) weekly oil stocks data, due on Wednesday, S&P Global Platts said the data was likely to show a build in U.S. crude stocks of 2.4 million barrels in the last week.
"An expected rebound in U.S. crude imports could have offset higher refinery utilization last week, likely leading to another build in crude stocks for the third straight reporting period," S&P Global Platts said in its preview released on Monday after carrying out a survey of analysts.
Over the two weeks ending September 8, crude stocks rose 10.5 million barrels, Geoffrey Craig, S&P Global Platts' oil futures editor noted, adding that most of the build was due to Hurricane Harvey's damaging oil refinery infrastructure and a lack of U.S. export capability due to the extreme weather.
"A major driver behind inventory movements since Hurricane Harvey has been U.S. Gulf Coast refinery utilization, which sunk to 60.7 percent the week ending September 8, down from 96 percent of capacity two weeks prior to that," Craig said, adding: "US inventory data will reflect post-Hurricane Harvey adjustments for another few weeks, at a minimum, as Gulf Coast refiners, terminals and ports continue the process of returning to normal."
Craig noted that although refineries were starting to return to normal, crude oil prices were likely to be suppressed by "an influx of U.S. crude imports that will probably materialize as tankers sitting in the Gulf of Mexico waiting for shut Texas refineries to reopen get to offload their cargoes."