Hurricane Harvey Sends Gasoline Prices Up

Dianna Christensen
September 3, 2017

Gasoline prices in the region GL92-SIN-CRK were $16.34 a barrel, also the highest since January 2016. Most major Texas ports remained closed to large vessels, limiting discharge of imported crude.

However, the contract traded at $46.09 a barrel, up 13 cents Thursday, after falling more than one per cent on Wednesday.

But in recent months those expectations dimmed.

The analyst noted propane prices barely edged higher.

In the nine years since the last major hurricane hit Texas, the US has almost doubled the amount of crude it drills to the point where it now challenges Russian Federation and Saudi Arabia in the top tier of oil producers.

Traders in Asia have also scrambled to buy oil products to ship to the United States and Latin America.

Now that Hurricane Harvey has left the Coastal Bend, here are some post-storm safety tips.

US crude stocks fell sharply last week even as refineries hiked output in the run up to the Harvey's approach, the Energy Information Administration said on Wednesday. As a result, if refineries restart and crude oil and employees can get to them, they is enough product to refine.

As many as 15 refineries were shut down because of the hurricane.

Market participants will be on the lookout at 1:00 p.m. for the weekly reading on the US oil rig count from oilfield services firm Baker Hughes. "Despite the country's overall oil and gasoline inventories standing at or above 5-year highs, until there is clear picture of damage and an idea of when all refineries can return to full operational status, gas prices will continue to increase", added Meade. "Anybody that's going to go out and try to take advantage of a disaster victim ought to expect the law enforcement to come down [on] them with a hammer", said homeland security adviser Tom Bossert.

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West Texas Intermediate ( WTI ) crude futures CLc1 were at US$46.35 per barrel at 0155 GMT, down 9 cents from their last close. Between five and 15 inches of rain was expected in south-central Louisiana, the National Hurricane Center said on Tuesday.

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"We could see rising USA crude inventories in the next couple of weeks until demand from refineries recovers".

As of the close on Wednesday, WTI was at $45.96 a barrel, some $4.90 below Brent, a far bigger discount than the $2.62 that prevailed at the start of August.

Worldwide benchmark Brent crude settled $1.52 higher, or 2.99 per cent, at $52.38 a barrel.

Lack of impact now doesn't mean an impact isn't coming.

Like Hurricanes Katrina or Gustav, when strong winds mainly caused damage to oil production, Harvey has also severely disrupted the US refining industry and products pipelines, causing a spike in products prices.

Federal authorities have not ruled out releasing crude to other refiners.

The Explorer Pipeline - which brings refined products from Texas to IL - has been closed since Tuesday but is expected to reopen on Friday.

There is little doubt that Harvey has complicated the efforts by OPEC and its allies to force global inventories lower, but if they respond by tactically allocating different grades of crude among customers, it could still work to their benefit.

"There are definitely going to be some spot shortages developing as far east as SC, with those big cities that usually get their supply from the Colonial pipeline, Atlanta, Knoxville, Nashville", said John Kilduff of Again Capital.

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