Despite the fact that numerous refineries and some crude production were knocked off by the Hurricane Harvey and wreaked havoc along the U.S. Gulf coast over the weekend, oil markets were roiled on Monday.
As massive floods caused by the storm forced refineries across the U.S. Gulf Coast to shut down, gasoline prices hit two-year highs.
U.S. crude futures eased as the U.S. refinery shutdowns could reduce demand for American crude, even though Brent futures were pushed up by pipeline blockades in Libya in crude markets.
Resulting in the killing of at least two people, causing large-scale flooding, and forcing the closure of Houston port as well as several refineries, Harvey came ashore over the weekend as the most powerful hurricane to hit Texas in more than 50 years.
Harvey was expected to linger close to the shore through Tuesday, and floods would spread from Texas eastward to Louisiana, the U.S. National Hurricane Center (NHC) said on Monday while saying that Harvey was moving away from the coast.
While Louisiana has 3.3 million barrels, Texas is home to 5.6 million barrels of refining capacity per day. As a result of the storm, it is estimated that over 2 million barrels per day (bpd) of refining capacity has gone offline.
Noting the highest level since late July 2015, before easing slightly to $1.7622, spot prices for U.S. gasoline futures surged 7 percent to a peak of $1.7799 per gallon.
Several refining and shipping sources told the media on Monday that in order to avoid a fuel shortage, U.S. traders were seeking oil product cargoes from North Asia.
“There may be meaningful and long-term damage to Texas’ refining capacity,” said Jeffrey Halley, analyst at futures brokerage OANDA.
Crude production was also affected, but to a lesser degree.
According to the U.S. Bureau of Safety and Environmental Enforcement, as of Sunday afternoon, about 22 percent, or 379,000 bpd, of Gulf production was idled due to the storm. Trading sources also said that there may also be around 300,000 bpd of onshore U.S. production shut in.
Down 17 cents, or 0.4 percent, from their last settlement, U.S. West Texas Intermediate (WTI) futures were at $47.70 a barrel.
“It may well be that the market feels the choke point in petroleum’s value chain is not (crude) production, but refined products,” Halley said.
There could be excess crude as refiners stay shut and don’t process crude to produce fuel if U.S. oil production is little affected.
Up 17 cents, or 0.3 percent as Libyan pipeline blockades prevented three oilfields from supplying crude, in international oil markets, Brent crude was stronger at $52.58 per barrel.
These opposing price movements pushed the WTI discount versus Brent to as much as $4.99 per barrel, the widest in two years.
Some analysts said the impact would be felt globally and affect energy markets for weeks, although the full extent of the storm's damage is not yet clear
(Source:www.reuters.com)
As massive floods caused by the storm forced refineries across the U.S. Gulf Coast to shut down, gasoline prices hit two-year highs.
U.S. crude futures eased as the U.S. refinery shutdowns could reduce demand for American crude, even though Brent futures were pushed up by pipeline blockades in Libya in crude markets.
Resulting in the killing of at least two people, causing large-scale flooding, and forcing the closure of Houston port as well as several refineries, Harvey came ashore over the weekend as the most powerful hurricane to hit Texas in more than 50 years.
Harvey was expected to linger close to the shore through Tuesday, and floods would spread from Texas eastward to Louisiana, the U.S. National Hurricane Center (NHC) said on Monday while saying that Harvey was moving away from the coast.
While Louisiana has 3.3 million barrels, Texas is home to 5.6 million barrels of refining capacity per day. As a result of the storm, it is estimated that over 2 million barrels per day (bpd) of refining capacity has gone offline.
Noting the highest level since late July 2015, before easing slightly to $1.7622, spot prices for U.S. gasoline futures surged 7 percent to a peak of $1.7799 per gallon.
Several refining and shipping sources told the media on Monday that in order to avoid a fuel shortage, U.S. traders were seeking oil product cargoes from North Asia.
“There may be meaningful and long-term damage to Texas’ refining capacity,” said Jeffrey Halley, analyst at futures brokerage OANDA.
Crude production was also affected, but to a lesser degree.
According to the U.S. Bureau of Safety and Environmental Enforcement, as of Sunday afternoon, about 22 percent, or 379,000 bpd, of Gulf production was idled due to the storm. Trading sources also said that there may also be around 300,000 bpd of onshore U.S. production shut in.
Down 17 cents, or 0.4 percent, from their last settlement, U.S. West Texas Intermediate (WTI) futures were at $47.70 a barrel.
“It may well be that the market feels the choke point in petroleum’s value chain is not (crude) production, but refined products,” Halley said.
There could be excess crude as refiners stay shut and don’t process crude to produce fuel if U.S. oil production is little affected.
Up 17 cents, or 0.3 percent as Libyan pipeline blockades prevented three oilfields from supplying crude, in international oil markets, Brent crude was stronger at $52.58 per barrel.
These opposing price movements pushed the WTI discount versus Brent to as much as $4.99 per barrel, the widest in two years.
Some analysts said the impact would be felt globally and affect energy markets for weeks, although the full extent of the storm's damage is not yet clear
(Source:www.reuters.com)
