Crude climbs as Texas works to recover from Harvey
Crude oil rose, and gasoline fell to the lowest in more than a week, as Gulf Coast refiners continued their recovery from the devastation of Hurricane Harvey.
Gasoline futures in New York have lost 3.7% since the 1st September. Valero Energy Corporation returned two Texas facilities to pre-storm rates, Citgo Petroleum Corporation restarted its Corpus Christi refinery and Exxon Mobil Corporation began shipping fuels through pipelines in the Houston area. The market is now watching another major hurricane, Irma, as it moves across the Atlantic toward the Caribbean.
Front-month gasoline futures surged more than 25% in August as Harvey forced shutdowns of key refineries, pipelines and ports which produce and dispatch much of the continent’s fuel. While the storm sent prices higher, the end of the summer driving season is poised to reduce consumption. Goldman Sachs Group sees half of shut US refinery capacity back by the 7th September.
Gasoline futures “are under pressure,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “The refineries are getting started sooner than feared.”
October gasoline futures fell as low as US$1.6579/gal on the New York Mercantile Exchange, 9 cents below the close on the 1st September, and were down 6.5 cents at US$1.6834 as of 8:19 am local time. There was no settlement on the 3rd September because of the US Labor Day holiday.
West Texas Intermediate crude for October delivery rose 81 cents to US$48.10/bbl in New York. Brent for November settlement gained 0.8% to $52.76/bbl on the London-based ICE Futures Europe exchange, and traded at a premium of US$4.17 to November WTI.
Irma, now a Category 5 hurricane, was expected to cross the northern Leeward Islands late Tuesday, the 5th and early Wednesday the 6th September, according to an advisory from the US National Hurricane Center. The NHC issued warnings for the US and British Virgin Islands, Puerto Rico, Vieques and Culebra, while Florida declared a state of emergency to prepare for a potential strike by Irma.