USA drivers are starting to feel the effects of Tropical Storm Harvey in their wallets as the country’s fuel distribution network starting at the Gulf Coast and stretching across the country is squeezed by floods, refinery closures and dwindling supplies.
Advertisement
“The flooding from Hurricane Harvey shut the largest refinery in the US, pushing gasoline prices to a two-year high”.
The US Gulf Cost is home to about a third of American refining capacity, much of which is now off line due to the storm and flooding. In a market that was already showing signs of tighter supply thanks to major disruption at Pernis in Rotterdam, Europe’s largest refinery, the severe restriction of flows from the U.S.is also providing support.
Lack of impact now doesn’t mean an impact isn’t coming.
On Wednesday, Valero said that due to flooding they were fully shutting their Port Arthur refinery. The more-active October contract rose 5.7 cents to $1.6587 at 1:40 p.m.in London.
USA crude oil was down 27 cents or 0.6% at $46.16 a barrel by 04:30 AM ET (08:30 GMT), not far from Monday’s one-month trough of $45.77.
Brent crude LCOc1 for November was 2 cents higher at $52.88 a barrel by 11:02 EDT (1502 GMT).
U.S. West Texas Intermediate crude futures CLc1 recovered some early-week losses, trading $1.24 per barrel higher at $47.20 per barrel at 1309 EDT (1709 GMT).
But market rebalancing may take longer than expected if production comes back in the U.S. and refiners can not feed that output into flooded refineries.
Colonial expects to resume activity in Houston beginning on Sunday.
Gasoline prices fell for the first time in nearly two weeks, after rising 25 percent last month, as traders assessed the impact of Tropical Storm Harvey.
However, the data was collected before Hurricane Harvey hit the Gulf Coast.
The motorist group AAA said Thursday that the average national gas price has seen a jump to $2.37 while prices have shot up across the country.
Nearly one-third of the oil refineries in the US south went offline when Harvey blew through Texas as a hurricane.
However, there are ripple effects. Explorer shut two main lines carrying fuel to the Chicago market Tuesday.
“Brent is still consolidating but the upside will be limited for United States benchmark West Texas Intermediate (WTI), simply because 25 per cent of the USA refining capacity is shut down”.
“This release sends a message to the market that the USA government is willing to address any kind of supply shortages”. A better-than-expected fall in crude oil and product inventories could benefit crude oil, gasoline, and diesel prices.
Advertisement
Sources told Reuters ExxonMobil was shutting its Beaumont, Texas refinery.
