How Will Harvey Impact Oil And Gasoline Prices?

Javier Stokes
August 31, 2017

New York, Aug 29 (Reuters) - U.S. gasoline futures jumped 4 percent while crude prices were mixed on Tuesday after a hurricane shut down more than 19 percent of the country's refining capacity, curbing fuel production and further bloating crude inventories.

International Brent crude futures were 5 cents lower at $51.84 per barrel, having traded as high as $52.19 earlier in the day.US West Texas Intermediate (WTI) crude rose 10 cents to $46.67 a barrel, after falling more than 2 per cent in the previous session. The discount for U.S. WTI versus Brent reached $5.92 a barrel on Tuesday, its widest in more than two years.

Massive floods caused by Harvey forced several US Gulf coast refineries to close, and while some refineries were starting to prepare for re-starts, heavy rains are expected to last through Wednesday after already causing catastrophic flooding in Houston.

Oil prices are poised to climb over the coming weeks as supply and demand approach parity, according to analysts who spoke to CNBC as the remnants of Hurricane Harvey continues to ravage Houston, the energy capital of the United States.

The United States has 141 oil refineries as of January 1, with a total capacity of 18.6 million bpd, according to the Energy Information Administration.

The refinery closures helped to push USA gasoline futures to a two-year high of $1.7799 per gallon on Monday, though they had receded to $1.7466 by 1325 GMT on Tuesday. But MRs may get more work in Europe to bring gasoline cargoes to the US.

Harvey may force Rangers-Astros series to neutral site
The Rangers GM also told 105.3 The Fan that switching the games wouldn't be fair to fans who had tickets to the September series. The Astros-Rangers series scheduled to begin Tuesday at Minute Maid Park was moved to Tropicana Field in Tampa Bay.

Prices would be higher if not for record refinery runs in 2017, said Matt Smith, director of commodity research at Clipperdata. Onshore, numerous nation's refineries remain offline because of heavy flooding in and around the Houston area.

The storm caused the closure of many oil platforms in the Gulf, and about a fifth of the region's oil output remained shut down, according to U.S. authorities.

Outside of the immediate impact from Harvey, last week saw another decline in USA exploration and production activity.

Crude markets were also looking at disruptions in Libya and Colombia.

"We are thus lowering our Brent oil price estimates to $55 per barrel from $60 per barrel in 4Q17 (and) to $57 per barrel from $64 per barrel in 2018", Jefferies bank said.

Other reports by

Discuss This Article

FOLLOW OUR NEWSPAPER