You are here
US petrol prices jumps 4%, oil mixed as storm hits more refineries
[NEW YORK] US petrol futures jumped 4 per cent while crude prices were mixed on Tuesday after a hurricane shut down more than 19 per cent of the country's refining capacity, curbing fuel production and further bloating crude inventories.
Petrol rose still higher post-settlement, after sources told Reuters that Motiva was shuttering the largest US refinery. That meant at least 3.65 million barrels per day (bpd) of refining capacity was offline, or 19.6 per cent of total US capacity, based on company reports and Reuters estimates. The Gulf is home to nearly half of US refining capacity.
"Because that demand is gone that's where the selling pressure in the market is coming from," said Gene McGillian, manager of market research at Tradition Energy. "We have no idea when (the refineries will) come back on, the market is taking a wait and see approach."
US West Texas Intermediate (WTI) crude edged down 13 cents or 0.3 per cent to US$46.44 a barrel. International Brent crude futures closed up 11 cents or 0.2 per cent to US$52.00 a barrel. The discount for US WTI versus Brent reached US$5.92 a barrel on Tuesday, its widest in more than two years.
US petrol futures jumped 4 per cent to settle at 1.7833, the highest in more than two years.
After settlement, sources told Reuters that Motiva Enterprises was shutting down the nation's largest refinery due to flooding. Motiva has already been reducing production at the 603,000 barrel per day (bpd) Port Arthur, Texas, refinery as flood waters continued to inundate the area.
The Motiva shutdown sent after-settlement gasoline prices up to 1.8180.
Prices would be higher if not for record refinery runs in 2017, said Matt Smith, director of commodity research at Clipperdata.
"They're not spiking as much as they would have had we not had the backdrop of plentiful inventories," said Mr Smith, noting petrol supplies sit at a five year high for this time of year.
Sources told Reuters ExxonMobil was shutting its Beaumont, Texas refinery.
Some refineries were preparing for restarts, but heavy rains were expected to last through Wednesday, adding to catastrophic flooding.
The storm has set a rainfall record for tropical cyclones in Texas, the National Weather Service said.
More than 18 per cent of oil production in the Gulf of Mexico was shut in, the US Department of the Interior's Bureau of Safety Environmental Enforcement said. Still, tropical Storm Harvey, which was downgraded from a hurricane, hit refiners harder.
After settlement, industry group the American Petroleum Institute said its data showed that last week US crude stocks fell, while petrol inventories increased and distillate stocks drew.
Crude markets were also eyeing disruptions in Libya and Colombia. Yet crude remains in ample supply. Jefferies Bank said it was lowering its fourth-quarter Brent oil price estimates to US$55 a barrel from US$60 and its 2018 forecast to US$57 from US$64.