Published: Sun, September 03, 2017
Money | By Armando Alvarado

Gas prices are still climbing, now up 24 cents since Harvey

Gas prices are still climbing, now up 24 cents since Harvey

Almost half of US refining capacity is in the Gulf Coast region, an area with proximity to plentiful crude supplies from Texas oil fields and also Mexican and Venezuelan oil imports.

Indian Oil has gained nearly 5 percent this week, while Thailand's IRPC Pcl has risen 4.4 percent and India's Mangalore Refinery and Petrochemicals Ltd. has gained about 12 percent.

Two of the leading price-forecasting analysts, GasBuddy's Patrick DeHaan and Tom Kloza of the Oil Price Information Service, now see the national average peaking as high as $2.75 a gallon in the next few days.

Benchmark U.S. gasoline prices slid for the first day since Hurricane Harvey struck the U.S. oil industry heartland, as some refineries restarted operations, while oil prices remained under pressure and settled about flat.

Energy Secretary Rick Perry said Thursday he is releasing 500,000 barrels of crude oil from an emergency stockpile in a bid to prevent gasoline prices from spiking in the wake of disruptions caused by Harvey.

The biggest United States refiner, Motiva's Port Arthur facility which can handle 600,000 barrels of crude daily, will be shut for at least two weeks, according to sources familiar with plant operations. It's reduced USA fuel-making capacity by about 4.25 million barrels a day to the lowest since 2010. It now is at 679 million barrels. Overall gasoline demand hit a record in the week, hitting an estimated 9.85 million barrels per day.

Sen. Edward Markey, D-Mass., urged the department this week also to release gasoline from the country's emergency gasoline reserve, which holds a total of 1 million barrels of gasoline in three locations in the Northeast: New York Harbor, Boston and Maine.

In another sign US consumers could see further gains in fuel prices, gasoline futures had their highest increase since March 2016 on Thursday.

Analysts are watching another storm on the horizon that may further disrupt USA exports that stood at between 5 million to 6 million barrels a day of crude and petroleum products before the storm.

Cloud National Guard Soldiers, Helicopters to Help Hurricane Harvey Victims
Helicopters and soldiers from Iowa are headed to Texas to help with recovery efforts. "This is what we train for". The state of Texas requested the support from Iowa.

Motorist line-up for gasoline at a Costco gas station in the aftermath of Hurricane Harvey in Cedar Park, Texas, U.S., September 1, 2017.

That works out to about five months of oil that we would need to keep everything running just like normal in the country, sitting in man-made salt caverns 2,000 to 4,000 feet underground at four sites all along the Gulf Coast. "You do have some signs of rebalancing, regardless of Harvey".

Meanwhile, crude prices have stabilised somewhat after losing more than $1 yesterday as demand dropped. Last year, they were at 5.188m on average - and rising.

The price premium on European gasoline products has already risen to its highest level in two years, which means higher profit margins for refiners on the Continent.

"We could see rising USA crude inventories in the next couple of weeks until demand from refineries recovers".

Goldman Sachs Group Inc said it could take several months before all production could be brought back online.

The analyst noted propane prices barely edged higher.

Phillips 66 also said its Pasadena refined products terminal would resume truck loading for gasoline and diesel this weekend.

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