By September 5, 2017 Read More →

Oil prices up, gasoline futures down on Houston refineries restart

Oil prices

Fears that Hurricane Irma could hit Gulf of Mexico oil and gas platforms boosted oil prices on Tuesday. Accuweather image.

Oil prices up as OPEC signals supply deal may be extended

Oil prices rose and gasoline futures fell by about 3 per cent on Tuesday as US Gulf Coast refineries impacted by Hurricane Harvey gradually restart, boosting crude demand and easing fuel supply fears.

US WTI was up by $1.32 to $48.61/barrel by 2:03 p.m. EDT, their highest level in two weeks, and benchmark Brent crude rose by 98 cents to $53.32/barrel.

Trans Mountain ExpansionSome Texas shipping channels, oil pipelines and refineries are either restarting or readying to begin production again after Harvey knocked out almost one-quarter of all US refining capacity.

“This is kind of a boomerang,” John Kilduff, partner at energy hedge fund Again Capital told Reuters.  He added that just after the storm, there was a fear of gasoline shortages. However, “Today, there’s a bit of a worry in the short term that there could be an issue around crude supply.”

As of Monday afternoon, eight US oil refineries with total refining capacity of over 10 per cent of the total US production, or 2.1 million barrels per day (b/d) remained shuttered, according to the Department of Energy.

Colonial Pipeline, the largest US refined product pipeline, has resumed pumping of diesel and jet fuel shipments on its Line 2 from Houston.  “Line 2 has resumed operation from Pasadena and Houston,” the company said in a notice to shippers, as reported by Platts.

Gasoline futures fell significantly, down 3 per cent to $1.6954 per gallon and were down from $2.17 on Aug. 31.  Prices are now back to levels last seen prior to Harvey’s arrival.

Helping lift oil prices were signals from OPEC that they may extend their supply cut pact past March 2017.  A weak US dollar also lifted crude prices.

All this comes at a time when the US is bracing for impact from Hurricane Irma, which is currently a Category 5 hurricane with wind speeds of over 157 miles per hour.

Irma’s path, according to the US National Hurricane Center, is expected to pass by Florida to the south on Sunday and make its way into the Gulf of Mexico. John Kilduff says officials are concerned that Irma’s trajectory could take the powerful storm into areas where oil and gas platforms are located.

Fears around Irma’s possible destruction have also boosted oil prices.

The NHC says it is to early to determine what impacts Irma may have.

Right behind Irma is Tropical Storm Jose and an area of bad weather in the southwest Gulf of Mexico is threatening to become a tropical storm in the coming two days. Both are being monitored by the NHC.


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