Oil slips as market focus shifts to Jackson Hole

[LONDON] Oil prices slipped on Thursday, giving up some recent gains as the US dollar strengthened ahead of a meeting of central bankers in Jackson Hole, Wyoming, which could signal changes to monetary policy.

Benchmark Brent crude was down 20 US cents a barrel at US$52.37 by 1120 GMT.

US light, sweet crude was 20 US cents lower at US$48.21 a barrel.

The annual meeting at Jackson Hole starts on Thursday and will include speeches by US Federal Reserve Chair Janet Yellen and European Central Bank chief Mario Draghi on the outlook for monetary policy and interest rates.

Any support for the US dollar from the meeting could hit oil and other assets priced in the US currency.

"Comments by Yellen and Draghi may provide volatility for the US dollar, and thus US dollar-denominated commodities," said Hans van Cleef, senior energy economist at ABN AMRO in Amsterdam.

"That's encouraging some profit taking after yesterday's rally in crude," he added.

Both crude contracts rose more than 1 per cent on Wednesday, buoyed by potential output disruptions from the Gulf of Mexico storm Tropical Depression Harvey.

"For the next few days, the US market is going to be focused on Texas as Tropical Depression Harvey is expected to strengthen into a Category I hurricane by Friday," said Sukrit Vijayakar, director of energy consultancy Trifecta.

"Operators in the area are already closing down platforms and evacuating workers as a precaution," he added.

Harvey strengthened into a tropical storm with winds of about 65 km per hour and was located about 705 km southeast of Port Mansfield, Texas, the US National Hurricane Center reported.

Royal Dutch Shell, Anadarko Petroleum and Exxon Mobil have all taken steps to curb some oil and gas output at platforms in the Gulf.

Beyond the weather, traders said declines in US commercial crude storage levels were a sign of a gradually tightening market, although another rise in output held the market back.

US crude oil production hit 9.53 million barrels per day (bpd) last week, its highest since July 2015 and up more than 13 per cent from its most recent low in mid-2016.

Despite this, US crude stocks fell last week and gasoline stocks were down as well, the Energy Information Administration said on Wednesday.

Crude inventories fell by 3.3 million barrels in the week ending Aug. 18 to 463.17 million barrels, down 13.5 per cent from record levels last March.

REUTERS