How Will Harvey Impact Oil And Gasoline Prices?

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According to estimates of analysts of Goldman Sachs, the refining capacities were affected on Sunday to the tune of nearly 3 million barrels per day, or 16.5 % of the capacity total of U.s. refining.

Among the plants being shut down was Exxon's 560,500-barrel per day facility in Baytown, which is the second-largest oil refinery in the US after Port Arthur.

"In terms of the energy market, what needs to be seen is how soon the shut in capacity comes back on stream".

"It will be a while before operations can return to normal and the US refining industry is bracing itself for an extended shutdown", Stephen Brennock of oil broker PVM said.

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 national USA gasoline price on Monday stands at $2.38 per gallon, up more than 5 cents from a week ago.

The largest refinery in the United States, Motiva Enterprises' 603,000 barrel-per-day (bpd) plant in Port Arthur, Texas, was shutting down on Tuesday night because of flooding. The discount for U.S. WTI versus Brent reached $5.92 a barrel on Tuesday, its widest in more than two years. It is mounted Sunday evening in electronic trading up to 1,7799 US$, its highest level since June 2015.

Sources told Reuters ExxonMobil was shutting its Beaumont, Texas refinery. Some refineries were preparing for restarts, but heavy rains are expected to last through Wednesday, adding to catastrophic flooding in Houston.

"This storm has brought down the capacity of refineries in the u.s. more than 2 million barrels per day, this corresponds to a sharp decline for the demand of crude oil", said John Kilduff of Again Capital.

USA oil prices finished Wednesday with a loss (http://www.marketwatch.com/story/oil-pulls-back-further-as-harvey-continues-to-weigh-2017-08-30), at their lowest level in more than four weeks.

Given the reference period, the data will not have been affected by Hurricane Harvey and the overall impact was limited by uncertainty surrounding the impact of the storm on oil production and refinery capacity.

Analysts suggest that the latest disruption will eventually shift through to a rise in crude prices having been hovering round the $50 mark for some time.

Domestic crude output may inch closer to a record high, but the effects of Harvey on producers won't begin to be known until next week.

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