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Bloomberg
Gasoline surged to the highest in two years and oil declined as flooding from Tropical Storm Harvey inundated
refining centers along the Texas coast, shutting more than 10 percent of US fuel-making capacity.
Motor fuel prices rose as much as 6.8 percent, while New York oil futures slipped 0.9 percent. Harvey, the strongest storm to hit the US since 2004, made landfall as a hurricane Friday, flooding cities and shutting plants able to process some 2.26 million barrels of oil a day. Pipelines were closed, potentially stranding crude in West Texas and interrupting gasoline supply.
“Crude oil has taken it quite badly because of all of the refining capacity that has been shut in,†Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by phone from Copenhagen. “That’s only somewhat offset by the slowdown in production.â€
While gasoline spiked on the storm, demand for the motor fuel is set to decline over the next several weeks as the US summer driving season wanes and refineries begin seasonal maintenance, Hansen said.
Oil has traded this month in the tightest range since February as investors weigh rising global supply against output cuts by members of the Organization of Petroleum Exporting Countries and its allies.
As Harvey led to widespread flooding, Royal Dutch Shell
Plc shut its Deer Park plant, while Magellan Midstream Partners LP suspended its inbound and outbound refined products and crude pipeline transportation services in the Houston area.