Gas prices surge in NY area in wake of Harvey

Posted September 01, 2017

Gasoline for September delivery settled up 25.52 cents, or 13.5%, at $2.1399 on the last day of trading in the contract.

The country's biggest fuel transport system, the Colonial Pipeline, also said it would shut its main diesel, jet fuel and gasoline lines because of outages at its supply points.

That likely prompted some of the run on gas reported in parts of Texas, "simply because there's more anticipation and maybe there might be a shortage and what people are filling up all their vehicles", said the President of the Louisiana Oil and Gas Association Don Briggs.

Harvey has shuttered about 23% of USA refining capacity, with multiple refineries in the Houston, Port Arthur and Beaumont, Texas, areas closed, including the nation's largest operated by Motiva Enterprises LLC.

As floodwaters in Texas rose, so did gasoline prices - all over the nation.

Flooding is "now the greatest threat" to U.S. Gulf Coast energy infrastructure, Goldman Sachs Group Inc. analysts including Damien Courvalin said in an emailed report on Wednesday.

Worldwide benchmark Brent crude was at $50.86, unchanged from the previous day, when the contract fell more than 2%.

Analysts said aside from perceived US fuel shortages that were helping gasoline rally, demand for refined products across the world were also picking up as refineries in Europe and Asia expanded production to replace some of the lost USA supply.

"For all intents and purposes, there's little to no gasoline consumption in that market right now". Total SA's refinery in the same area had a power loss while Valero Energy Corp.'s nearby facility was also said to be shutting.

The expected US crude build-up on Tuesday widened the WTI discount to Brent to $5.64 per barrel, its widest in over two years.

Analysts called the status of USA refineries a key to oil prices. "Crude imports and oil production in the Gulf of Mexico should be ramped up again more quickly than crude oil processing", the analysts wrote in a note Friday.

Crude futures settled higher on Thursday, but ended the month in negative, following concerns over an uptick in crude supplies after floods knocked out almost a third of United States oil refineries. "Multiple refineries and drilling rigs had to be evacuated ahead of the storm, and the Houston Ship Channel was closed".

The data showed a 5.39 million barrel drop in commercial crude stocks last week.

That's down 14.5% from record levels reached in March. The slump reflects less demand for oil because of the refinery shutdowns.

Analysts at JBC Energy said that figure could slip to as low as 15-16 MMbbl/d.