U.S. October West Texas Intermediate crude oil posted its steepest monthly loss in more than a year on demand concerns after hurricane damage and floods knocked out a quarter of U.S. refining capacity.
U.S. gasoline futures continued to soar, with prices hitting a two-year high above $2 a gallon, boosted by fears of a fuel shortage just days ahead of the Labor Day weekend that typically brings a surge in driving while marking the end of the U.S. driving season.
In other news, the U.S. Energy Department said it would release 500,000 barrels of crude oil from the Strategic Petroleum Reserve.
The Colonial Pipeline Co, which operates the biggest U.S. fuel transport system, said it would shut its main lines to the Northeast amid outages at pumping points and lack of supply from refiners.
The price action at the end of the week suggests the current steep recovery was a response to a bigger-than-expected sell-off. This likely made the market more attractive to bargain-hunters.
Goldman Sachs is saying they expected U.S. infrastructure outages to last several months but said it was difficult to estimate the exact damage.
Some analysts are saying the negative impact on crude oil demand and oil product supply might be less severe than feared. This is because refineries outside the affected area may delay maintenance to benefit from high processing margins.
Traders have been respecting support and resistance, but the sideways trading range suggests…