Enero 22, 2018

Crude Oil Rises On Refinery Hopes

06 Setiembre 2017, 08:00 | Dolorita Barahona

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US gasoline prices sink as Harvey subsides

Hedge funds turned bearish towards USA crude while boosting bullish positions in gasoline and heating oil in the final week of August, anticipating major disruption to US refineries as a result of Hurricane Harvey.

As a result, 10 oil refineries with a total capacity of 3.075 million barrels per day remained closed due to the effects of the disaster.

The average gasoline price was $2.648, 30.2 cents higher than a month ago, according to motorist advocacy group AAA.

Retail gas prices continue to climb, partially because of the shortage, partially because of the self-fulfilling prophecy of the shortage, and partially because of the Labor Day weekend.

Oil prices gained Wednesday on fears of potential damage to US oil production from Hurricane Irma, as well as renewed demand for crude from restarted refineries in the Gulf Coast. Futures traders anxious that the approaching Hurricane Irma could disrupt demand while supply recovered as most refineries returned to service.

The upswing in crude prices marked a swift reversal from last week, when prices had languished in the wake of Hurricane Harvey.

The US National Hurricane Center (NHC) said that Irma is a category five hurricane, with maximum sustained winds estimated to be almost 295km/h. About a quarter of United States refining capacity was shuttered.

Front-month gasoline futures surged more than 25% in August as Harvey forced shutdowns of key refineries, pipelines and ports that produce and dispatch much of the continent's fuel.

The market was "waiting for the refineries to restart so demand could start to pick up again", Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle, which oversees $142 billion of assets, said by telephone. Valero Energy Corp. has two of its five refineries shut down by Harvey up and running at pre-storm capacity, with two more getting ready to restart soon.

Flooded right-of-ways, power outages and, primarily, a lack of fuel to ship idled the Magellan and Explorer pipelines in Houston, and limited the flow rates on the Colonial Pipeline, which could not source supply at its Houston-area and Hebert origin points in Texas.

A number of major refineries, which convert crude oil into refined products such as gasoline and jet fuel, as well as distribution pipelines were gradually resuming operations.

Many of the Gulf's ports have started to resume operations, but most are doing so at reduced levels.

Though another hurricane - Irma - strengthened on Tuesday into a Category 5 hurricane, the most powerful storm on the Saffir-Simpson scale with sustained winds of over 157 miles (253 km) per hour. Irma could pinch demand recovery more than refining capacity, Goldman Sachs said.

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