Harvey floods U.S. refineries, roils global fuel markets
Sep 01 2017 by Cristina Jennings
Refineries throughout the country last week were already at 96.6 percent of their operable capacity, according to an Energy Information Administration report that was released today. The refineries have a combined capacity of 688,776 b/d, equal to 7.1% of total Gulf Coast (PADD 3) refining capacity and 3.7% of total USA refining capacity.
Canadian-owned refineries are expected to register higher profits as more U.S. Gulf Coast facilities are shut down due to ongoing extensive flooding from what's left of Hurricane Harvey.
About 4.2 million barrels of USA refining capacity have been shut by Harvey, based on company reports and Reuters estimates.
"Disruptions to refineries, production and trade will also make the weekly EIA data even noisier and less useful as a high frequency indicator at the very time OPEC needs it most", the Barclays note added. Philadelphia Energy Solutions, the region's largest refiner, said it had sold all its available regular gasoline barrels because of increased demand, while Monroe Energy's refinery had increased runs.
Motiva Enterprises LLC's Port Arthur refinery, the country's biggest, began a controlled shutdown because of severe flooding.
According to GasBuddy, the average cost per gallon in Rhode Island rose 1.5 cents in the past week, averaging $2.32 per gallon. The global benchmark Brent crude climbed 2% to $51.87 a barrel.
"Some offshore oil and gas operators evacuated platforms and rigs, although offshore production was picking up a bit Sunday, while onshore operators were shutting in what may amount to hundreds of wells in the Eagle Ford Shale in South Texas", Platts said. In Europe, benchmark gasoline margins jumped to a two-year high of almost $21 per barrel. "It's unprecedented flooding, so who knows what is going to happen". Others said higher gasoline prices might prompt operational refineries to delay typical September seasonal maintenance.
On Friday, Hurricane Harvey hit Texas as a category four storm, affecting mainly the southeastern part of the state, including the city of Houston, in addition to southwestern part of the state of Louisiana.
AAA Texas reported that the average price for gasoline across the USA was $2.45 on Thursday, up a dime from the prior Thursday and five cents from Wednesday. Some states, like Georgia, have seen prices rise as much as 12 cents a gallon as reduced supply has hampered distribution.
On Wednesday, oil prices fell despite a weekly drop in closely watched US commercial crude stocks of 5.39 million barrels.
The Georgia-based company said in a statement that it expects to shut off the line Thursday.
The effects of the shutdowns will reverberate well outside of Texas. Crude inventories fell by 5.4 million barrels in the latest week, far more than the decrease of 1.9 million barrels analysts had expected.