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Published: Sun, September 03, 2017
Economy | By Melissa Porter

Oil Edges Up as Harvey Disrupts US Crude Flow

Oil Edges Up as Harvey Disrupts US Crude Flow

The immediate area of the Gulf States and the Northeast are expected to be hardest hit by the interruption in oil refining capacity, with OPIS saying that unbranded fuel prices will increase in most parts of the U.S.as well. Even more production could see quality affected, which can drive up demand and prices for commercial-grade cotton.

Gasoline refinery profits in Singapore, a benchmark in Asia, jumped to over $15.50 per barrel since the storm hit the United States late last week, their highest level since early 2016.

The U.S. government tapped its strategic oil reserves for the first time in five years on Thursday, releasing 1 million barrels of crude to a working refinery in Louisiana.

It may be a long-term commitment, as Harvey is already one of the most devastating single storms in USA history, dropping over 50 inches of rain in some locations, with only Hawaiian mountain peaks ever having reported higher rain totals.

At least two major pipelines - one that ships gasoline across the southern United States and to NY, and another that flows north to Chicago - have been slowed or stopped because of flooding and damage. Explorer Pipeline, which runs from Texas to Chicago, will shut two lines early on Wednesday.

The storm caused the closure of refineries in the U.S. oil-producing heartland, which traders fear will lead to bigger crude stockpiles and push down prices.

Just like the banks, Sitton said there's plenty of supply, but it will take longer to get that gasoline to the stations due to the high demand.

Jeanette Casselano, a spokeswoman at AAA, said gas prices were already expected to rise over Labor Day Weekend as far back as July.

"Harvey will raise product prices nationwide, denting demand, especially in September", said Barclays analysts in a note Tuesday.

U.S. West Texas Intermediate (WTI) crude edged down 5 cents to $46.52 a barrel, after falling more than 2 percent in the previous session.

Oil prices have been under pressure this week as Tropical Storm Harvey battered the U.S. Gulf Coast, ripping through Texas and Louisiana at the heart of the U.S. petroleum industry. The average national price for regular-grade gasoline is up 10 cents in the last week to $2.449 a gallon, but some states have seen increases of as much as 19 cents, according to motorist group AAA.

Including the change in gas prices in ME during the past week, prices Sunday were 14.2 cents per gallon higher than the same day one year ago and are 5.3 cents per gallon higher than a month ago.

Motiva Enterprises [MOTIV.UL] planned to decide on Tuesday on whether to shut its Port Arthur, Texas, plant, the largest US crude refinery, two sources familiar with plant operations said.

Now that Harvey has moved east from south Texas, Valero Energy Corp., Citgo Petroleum Corp. and Flint Hills Resources LLC are preparing to restart those Corpus Christi refineries, according to regulatory filings and people familiar who asked not to be identified because the plans aren't public. "We will need to wait for the flood waters to recede in order to assess this", Halley said.

Prices would be higher if not for record refinery runs in 2017, says Matt Smith, director of commodity research at Clipperdata. The company said it discovered roof damage at the plant, which is the second-largest in the country.

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