Oil steady as Irma heads for Florida, Saudi Arabia cuts supply

MOSCOW (MRC) -- Oil prices steadied on Friday after almost a week of sharp rises as Hurricane Irma, one of the most powerful storms in a century, drove towards Florida after tearing through the Caribbean, reported Reuters.

Irma is the second major hurricane to approach the United States in two weeks and has already killed 14, flattening whole islands. Its predecessor, Harvey, shut a quarter of US refineries and 8% of US oil production.

"Hurricanes can have a lasting effect on refinery and industry demand," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. "The impact of the forces of nature on US oil production should not be overestimated - nor should their impact on demand be underestimated."

Brent crude was up 16 cents at USD54.65/bbl by 1145 GMT, after earlier reaching its highest level since April at USD54.80. US light crude oil was 14 cents lower at USD48.95/bbl.

Brent found some support from news that Saudi Arabia will cut oil supply allocations to its customers worldwide in October by 350,000 bpd.

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

Harvey's impact was also felt in oil production. US oil output fell by almost 8%, from 9.5 MMbpd to 8.8 MMbpd, according to the Energy Information Administration (EIA).

But the slowdown in refining and output should be temporary.

"Most refineries are restarting and we expect a near-full recovery by month-end," US investment bank Jefferies said.

Port and refinery closures along the Gulf coast and harsh sea conditions in the Caribbean have also affected shipping.

"Imports (of oil) to the US Gulf Coast fell to levels not seen since the 1990s," ANZ bank said.

It will take weeks for the US petroleum industry to return to full capacity, analysts say.

Hurricane Irma hit the Dominican Republic and Haiti on Friday, heading for Cuba and the Bahamas. It was predicted to reach Florida by Sunday.

The US National Hurricane Center (NHC) said that Irma was a Category 5 hurricane, with wind speeds of 160 mph-185 mph.

As MRC informed previously, Hurricane Harvey, which had killed more than 40 people and brought record flooding to the oil heartland of Texas, paralyzed a quarter of the US refining industry. Harvey, downgraded to a tropical storm and losing steam as it moved inland, shut at least 4.4 MMbpd of refining capacity in the USA.
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MOSCOW (MRC) -- Police and emergency workers filed suit on Thursday against French chemicals company Arkema SA, claiming they were injured after it failed to take adequate steps to avoid a fire at its Crosby, Texas, plant after Hurricane Harvey, said Reuters.

Seven police, fire and emergency medical technicians sued Arkema in Harris County District Court for at least $1 MM, alleging negligence by the company and executives led flammable organic peroxides stored at the site to ignite after the plant lost power during the storm. An Arkema spokeswoman was not immediately available for comment.

The seven emergency workers claim they received "serious bodily injuries" after breathing smoke released by the fire while manning an evacuation perimeter a mile and a half from the plant. The chemicals are used in the manufacture of plastics.

The company and its executives failed to protect the chemicals adequately and did not alert the emergency workers on Aug. 31 after some containers exploded, caught fire and released "toxic fumes," the suit said. Arkema's executives "repeatedly denied that the chemicals were toxic or harmful in any manner" and the seven emergency workers "relied on these representations and suffered serious bodily injuries as a result," the suit alleges.

In all, about 15 emergency workers outside the plant required care at the scene or were taken to a hospital and treated for smoke inhalation.

Floodwaters from Harvey cut electricity feeding refrigeration units used to keep the plant's tanks of volatile organic peroxide from warming and combusting. Plant workers evacuated after moving the chemicals into nine trailers.

The federal Chemical Safety Board has launched an investigation of the incident, and the Environmental Protection Agency has been monitoring the site for pollutants.
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MOSCOW (MRC) -- MEGlobal will immediately start supplying monoethylene glycol (MEG) to Asian customers at minimum contract volumes for an unspecified period due to a supply shortage, the producer said in a note to clients Thursday, as per Apic-online.

Implementation of the measures in the Asian region would include the Middle East, Turkey, India and Pakistan markets.

MEGlobal is a wholly-owned subsidiary of Kuwait's petrochemicals major Equate Petrochemical, which has MEG facilities at Shuaiba in Kuwait.

Equate will be conducting a major turnaround lasting 30-40 days at its "bigger unit" in Kuwait during the fourth quarter, which will result in a loss of MEG production of 70,000-100,000 mt, a company source said.

Equate's MEG capacity in Kuwait has a nameplate capacity of 1.2 million mt/year.

Adding to the supply woes is the aftermath of Hurricane Harvey on the US Gulf Coast, which has meant its US facilities have been closed, the company source added. As a result, the MEG supply from MEGlobal will be significantly affected in the fourth quarter.

"In fact, our major supply partner in the USGC has declared force majeure to MEGlobal," the note said.

As MRC reported before, MEGlobal plans to construct a new world-scale MEG manufacturing facility at Dow’s Oyster Creek site in Freeport, Texas. The new Oyster Creek MEG facility will be owned by MEGlobal and is the company’s first manufacturing unit in the US. The new MEGlobal plant will create 1,400 construction jobs at the project’s peak, and the company will employ approximately 50 new workers when it goes on stream in mid-2019.

MEG is used in a number of market applications, including polyester fibers, polyethylene terephthalate (PET) bottles and packaging, antifreeze and coolants, paints, resins, deicing fluids, heat transfer fluids and construction materials.

Established in 1995, Equate Petrochemical Company is an international joint venture between Petrochemical Industries Company (PIC), The Dow Chemical Company (Dow), Boubyan Petrochemical Company (BPC) and Qurain Petrochemical Industries Company (QPIC). Commencing production in 1997, Equate is the single operator of a fully integrated world-scale manufacturing facility producing over 5 million tons annually of high-quality petrochemical products which are marketed throughout the Middle East, Asia, Africa and Europe.
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MOSCOW (MRC) -- The US Environmental Protection Agency is preparing for Hurricane Irma's landfall on the US East Coast by securing vulnerable toxic waste sites and easing gasoline standards to ensure steady fuel supplies, its chief told Reuters on Thursday.

EPA Administrator Scott Pruitt declined to say whether he believed claims by scientists that the second powerful storm to affect the United States in two weeks may have a link to warmer air and water temperatures resulting from climate change.

"The most we can do is help people in these areas by monitoring drinking water and respond to real and tangible issues," he said in a brief telephone interview.

Hurricane Irma is expected to make landfall in Florida as early as Friday after slamming Caribbean islands with 185 mph winds, only days after Hurricane Harvey triggered record flooding in Texas that killed scores of people.

The EPA said has issued waivers on certain federal requirements for the sale, production and blending of gasoline to avoid supply shortfalls in the aftermath of Harvey and as Hurricane Irma approaches Florida.

Pruitt said he spoke with Florida Governor Rick Scott about potentially issuing more waivers on gasoline requirements if the need arises after Irma.

"EPA will grant additional waivers if requested," he said.

He said the agency is also evaluating 80 Superfund toxic waste sites from Florida to North Carolina to identify those at risk of flooding.

The EPA has yet to finish assessing the impact of Harvey on Texas Superfund sites - heavily contaminated former industrial zones - amid widespread flooding. On Saturday, the agency said 13 sites were flooded or damaged, but the full impact on surrounding areas was not immediately clear.

Pruitt said the agency is also continuing to seek additional information about explosions last week at French chemical company Arkema's flooded plant in Crosby, Texas, which sickened more than a dozen law enforcement personnel and prompted an evacuation of the surrounding area.

As MRC wrote previously, hurricane Harvey, which had killed more than 40 people and brought record flooding to the oil heartland of Texas, paralyzed a quarter of the US refining industry. Harvey, downgraded to a tropical storm and losing steam as it moved inland, shut at least 4.4 MMbpd of refining capacity in the USA.
MRC

MOSCOW (MRC) — The United States wants the United Nations Security Council to impose an oil embargo on North Korea, ban the country's exports of textiles and the hiring of North Korean laborers abroad, and subject leader Kim Jong Un to an asset freeze and travel ban, according to a draft resolution seen by Reuters .

The US ambassador to the United Nations, Nikki Haley, has said she wants the 15-member council to vote on Monday on the draft resolution to impose new sanctions over North Korea's sixth and largest nuclear test. However, Russia's UN Ambassador Vassily Nebenzia has said a Monday vote may be "a little premature."

It was not immediately clear if the draft resolution had the support of North Korean ally China. Russian President Vladimir Putin insisted on Wednesday that resolving the North Korean nuclear crisis was impossible with sanctions and pressure alone.

A UN resolution needs nine votes in favor and no vetoes by the United States, Britain, France, Russia or China to pass. US Treasury Secretary Steven Mnuchin said on Wednesday that if the Security Council did not act, he had an executive order prepared to send to President Donald Trump that would "authorize me to stop doing trade and put sanctions on anybody that does trade with North Korea.

"The president will consider that at the appropriate time once he gives the UN time to act," Mnuchin told reporters. Since 2006, the Security Council has unanimously adopted eight resolutions ratcheting up sanctions on North Korea over its ballistic missile and nuclear programs. Haley said the incremental approach had not worked and a diplomatic solution could only be reached by imposing the strongest sanctions.

The new draft UN resolution would ban exports to North Korea of crude oil, condensate, refined petroleum products and natural gas liquids.

China supplies most of North Korea's crude. According to South Korean data, Beijing supplies roughly 500,000 tpy of crude oil. It also exports 200,000 tpy of oil products, according to UN data. Russia's exports of crude oil to North Korea are about 40,000 tpy.
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