Hong Kong: Gasoline extended gains for the longest run since 2013 and oil fell as refinery operations remain shut after tropical storm Harvey made landfall a second time, dumping heavy rain across Louisiana.
Motor fuel prices climbed as much as 6.6% in New York, advancing for an eighth session, while oil dropped even as US crude inventories fell for a ninth week. Harvey crossed the Gulf Coast on Wednesday morning near the Texas-Louisiana border and has shuttered about 23% of US refining capacity, including Motiva Enterprises LLC’s Port Arthur plant, the nation’s biggest.
US oil prices have lost almost 9% this month as Harvey crimps crude processing and investors weigh the nation’s rising output against supply cuts led by members of the Organization of Petroleum Exporting Countries. Motorists in states as far away as Florida and Maine will soon feel the wrath of the storm as gasoline pipelines shut after refining was halted.
“It’s now a matter of how long the refineries will stay closed because of flooding," said David Lennox, a Sydney-based analyst at Fat Prophets. “Once Harvey is behind the market, the test will be to see how strong the US demand will be outside of the seasonally strong period."
Gasoline for September delivery, which expires on Thursday, climbed as much as 12.39 cents to $2.0086 a gallon on the New York Mercantile Exchange. Prices added 5.7% to close at $1.8847 on Wednesday, the highest in more than two years. The more-active October contract climbed 2.5% to $1.6790 at 1:33 p.m. in Hong Kong.
West Texas Intermediate for October delivery was at $45.92 a barrel on the New York Mercantile Exchange, down 4 cents. Brent for October settlement, which expires on Thursday, fell 6 cents to $50.80 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $4.87 to WTI.
Flooding and power failures have reduced US fuel-making capacity by about 4.25 million barrels a day, the lowest since 2010. Now that Harvey has moved east, Valero Energy Corp., Citgo Petroleum Corp. and Flint Hills Resources LLC are preparing to restart refineries at Corpus Christi, near where the storm made landfall on Friday, according to regulatory filings and people familiar who asked not to be identified because the plans aren’t public. Bloomberg