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Oil stayed in its recent tight range after Hurricane Laura swept through the U.S. energy heartland without appearing to inflict major damage on key infrastructure.
Futures in New York were steady near $43 a barrel on Aug. 28, with average trading volumes in August plunging to multiyear lows. Laura, one of the most powerful hurricanes to ever hit Louisiana, knocked out power to hundreds of thousands of people and caused widespread damage. But ports and crude facilities in southeast Texas — including the largest U.S. refinery — seem to have avoided the worst of it.
Traders are now returning their focus to the recovery in oil demand that has appeared to stall this month. Crude prices have moved in a narrow range of about $4 in August and a gauge of market volatility is heading for its lowest close since January.
“The market is now likely to focus on demand again, which remains fragile in view of the weak economic situation in emerging economies and the seemingly never-ending pandemic,” said Eugen Weinberg, head of commodities research at Commerzbank AG.
As the pace of the global energy demand recovery takes center stage, there are shaky signs emerging across the globe. About half of India’s trucking fleet is still idled, leading to a bleak outlook for diesel consumption, while sales of motor fuels in the U.K. and a recovery in European air travel are flatlining.
The slowdown is resulting in weaker margins for producing fuels, reducing the incentive for refiners to purchase more crude. In Europe, profit from turning crude into diesel is at its narrowest since June, while that for gasoline in America is the lowest since April.
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