Oil markets roiled by Storm Harvey; US dollar extends fall
- Author: Zachary Reyes Sep 01, 2017,
Sep 01, 2017, 18:23
Harvey, which has been downgraded to a tropical storm, hit the coast of Texas on Friday as the most powerful hurricane to hit the USA state in more than 50 years, causing widespread damage and flooding.
Furthermore, it is unclear what if any benefit the SPR release will do to surging gasoline prices, as the bottleneck is not oil supply but rather refining capacity: as of this moment roughly 20% of U.S. refining is offline as a result of Harvey.
While infrastructure restarts following the storm are expected to extend into the coming weeks, on Wednesday Marathon Petroleum Corp was restarting its Galveston Bay Refinery, said sources familiar with plant operations.
Among refined products, ICE gasoil changed hands at $509.75 a metric ton, up almost 1% from the previous settlement.
USA crude oil prices are on track to post the steepest monthly losses in more than a year on Thursday as concerns spread over falling demand in the world's top oil-consuming country after storm Harvey knocked out nearly a quarter of its refineries.
"They're already amassing an armada of tankers to send European gasoline to the US and Latin America, while Asian countries are snapping up cargoes of liquefied petroleum gases - butane and propane mostly - to replace the loss of exports from Texas".
Harvey rolled into Texas on Friday as a Category Four hurricane, tearing down homes and businesses on the Gulf Coast, and triggering massive floods.
They had been pressured by concerns USA refiners will stay shut and demand less oil, potentially leading to higher US stockpiles and rekindling fears of a global supply glut.
According to Eikon shipping data, the Ridgebury Julia, a tanker carrying oil products, was diverted earlier this week.
Furthermore, gasoline inventories in the southeastern United States are now "at or above the historic five-year range", according the Energy Department.
Port Arthur is located along the border of both states.
Hurricane Harvey is sending pump prices higher for US motorists and causing temporary shifts in the flow of oil and gasoline around the world after taking down a huge chunk of USA refining capacity. Oil prices have dropped sharply this week even though FBE Energy estimates that the storm knocked out 780,000 barrels of Gulf of Mexico and Texas shale production. If any of them are damaged, strong profit margins for other refineries will last longer.
Concerns about high production from the United States could hinder price recovery and delay rebalancing. Elsewhere, for October delivery on the ICE Futures Exchange in London dipped 0.23% to $52.74 a barrel.
US crude inventories fell by 3.3 million barrels in the week ending August 18, to 463.17 million barrels, down 13.5 percent from their record levels last March. The crack spread (price of refined products minus cost of crude) has increased...
"There are very severe supply disruptions and we don't know how long it's going to last", Olivier Jakob, managing director at oil consultancy Petromatrix, said of gas shortages across the U.S.