Gasoline Surges As Harvey Wallops Refineries

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"As of Monday afternoon, between 2.5 million bpd and 3.5 million bpd of refining capacity in the Gulf Coast region was offline due to a combination of refineries being shut down or running at reduced rates".

USA gasoline futures jumped 4 percent to settle at 1.7833, the highest in more than two years.

About 16% of total US refining capacity, or 3 million barrels per day (bpd), has been lost since Hurricane Harvey descended on Texas on Saturday as the most powerful storm to hit the state in over 50 years, killing at least nine people and causing catastrophic flooding in the heartland of America's petroleum industry. On Tuesday, US gasoline futures jumped four percent.

The Energy Information Administration reported a bigger-than-expected weekly drop in US crude supplies, but gasoline stockpiles were flat and traders expect next week's government report to reveal the impact of Hurricane Harvey-related crude production and refinery shutdowns.

U.S. West Texas Intermediate (WTI) crude edged down 24 cents to $46.33 after falling more than 2 percent in the previous session and trading as high as $46.96 earlier in the day.

WTI light sweet crude oil was down 43 cents at $47.44 a barrel as refinery demand is expected to drop considerably.

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Gasoline prices surged but crude oil prices were lower Monday morning as Hurricane Harvey continued to wreak havoc on Houston-area refining.

Brent for October delivery is down 0.077% and WTI futures for the same month are down 0.151% at $46.50 a barrel. But MRs may get more work in Europe to bring gasoline cargoes to the US.

Preparing for more rain and floods, Total cut production in half at its 225,500 bpd refinery, also in Port Arthur.

Hurricane Katrina caused significant damage to U.S. refinery and production capacity in the Gulf of Mexico, and forced oil prices to briefly spike to above $70 per barrel in September 2005.

Previously, the American Petroleum Institute (API) announced a fall of 5.780 million barrels in United States crude stocks in the last week.

"We are thus lowering our Brent oil price estimates to $55 per barrel from $60 per barrel in 4Q17 (and) to $57 per barrel from $64 per barrel in 2018", Jefferies bank said.

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