Gasoline Surges, Oil Declines as Harvey Shutters Refineries

Gasoline surged to the highest in two years and oil declined as flooding from Tropical Storm Harvey inundated refining centers along the Texas coast, shutting more than 10 percent of U.S. fuel-making capacity.

Motor fuel prices rose as much as 6.8 percent, while New York oil futures slipped 0.9 percent. Harvey, the strongest storm to hit the U.S. since 2004, made landfall as a hurricane Friday, flooding cities and shutting plants able to process some 2.26 million barrels of oil a day. Pipelines were closed, potentially stranding crude in West Texas and interrupting gasoline supply.

“Crude oil has taken it quite badly because of all of the refining capacity that has been shut in,” Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by phone from Copenhagen. “That’s only somewhat offset by the slowdown in production.”

While gasoline spiked on the storm, demand for the motor fuel is set to decline over the next several weeks as the U.S. summer driving season wanes and refineries begin seasonal maintenance, Hansen said.

Gasoline for September delivery climbed as much as 11.33 cents to $1.7799 a gallon on the New York Mercantile Exchange, the highest intraday price for a front-month contract since July 2015. It traded at $1.7529 at 12:07 p.m. in London. West Texas Intermediate oil for October delivery fell 40 cents to $47.47 a barrel after advancing 0.9 percent on Friday.
more at: https://www.bloomberg.com/news/articles/2017-08-27/gasoline-surges-oil-steady-as-harvey-shuts-texas-refineries