Crude oil traded mixed in Asia on Monday, with a hydrogen bomb test claimed by North Korea over the weekend highlighting risk trade, and an upcoming meeting of the U.N. Security Council possibly responding with more sanctions on Pyongyang.
The U.S. West Texas Intermediate crude October contract rose 0.25% to $47.41 a barrel by close of trade. Elsewhere, on the ICE Futures Exchange in London, Brent oil for November delivery fell 0.49% to $52.49 a barrel.
Weekly U.S. reports on U.S. stockpiles of crude and refined products are due on Wednesday and Thursday to weigh what the impact of Harvey was on supply and demand. The reports come out one day later than usual due to the U.S. Labor Day holiday on Monday.
Last week, oil prices ended a bit higher on Friday but still posted a weekly loss as energy markets continued to weigh what the impact of Harvey will be on crude production and refinery demand in the Gulf of Mexico region.
Meanwhile, U.S. gasoline hit a two-year high above $2 a gallon on Thursday but eased back on Friday. The September futures contract settled up 25.5 cents, or 13.5%, at $2.139 on the last day of trading in the contract on Thursday.
Gasoline for October opened much lower on Friday, at $1.774 a gallon. It ended the day down 3.1 cents, or about 1.8%, to settle at $1.747. Despite Friday's decline, gasoline prices closed around 13.4% higher for the week.
Exactly a week after Harvey crossed the Gulf of Mexico off Port O'Connor, Texas, nearly a quarter of U.S. refining capacity has been taken off-line, representing roughly 4.4 million barrels per day, weighing on demand for crude oil, the primary input at refineries. More than 45% of the nation's petroleum refining capacity is located along the Gulf Coast, according to the Energy Information Administration.
The devastating impact of the storm on oil infrastructure in the heartland of the U.S. energy industry prompted the government to tap its strategic supplies and release 1 million barrels of crude oil to support refinery activity, as fears over fuel shortages remain front and center.
Falling crude prices have weighed on U.S. drilling activity over recent weeks, as data from oilfield services firm Baker Hughes showed the number of U.S. oil rigs held steady at 759 last week. The weekly rig count is an important barometer for the drilling industry and serves as a proxy for oil production and oil services demand.
Oil prices have been under pressure in recent weeks as concern over rising U.S. shale output canceled out production cuts by OPEC and non-OPEC members.
OPEC and 10 producers outside the cartel, including Russia, agreed since the start of the year to slash 1.8 million barrels per day in supply until March 2018 in order to reduce a global supply glut and rebalance the market. So far, the deal has had little impact on global inventory levels due to rising supply from producers not participating in the accord, such as Libya and Nigeria, as well as a relentless increase in U.S. shale output.