U.S. gasoline prices rose a sixth day and crude traded near $47 a barrel as traders assessed the risk to refineries and supply before a second hit on Texas from Tropical Storm Harvey.
Motor fuel prices rose 1.3 percent in New York, while crude futures traded near the lowest close in five weeks. Harvey, which made landfall on Friday, is poised to regain strength before crashing ashore again near the Texas-Louisiana border on Wednesday. Valero Energy Corp. and Citgo Petroleum Corp. were said to be preparing to restart their refineries in Corpus Christi after the storm moved through over the weekend.
Oil has lost almost 7 percent this month as investors weighed signs of rising global output against production cuts by some members of the Organization of Petroleum Exporting Countries. Harvey has so far done more to curb crude demand than supply, shuttering about 2.35 million barrels a day of refining capacity. It’s now heading toward eastern Texas, home to Motiva Enterprises LLC’s Port Arthur refinery, the nation’s largest. While the storm has sent gasoline prices higher, the end of summer driving season is poised to reduce fuel consumption.
“The information about damage remains limited but the disruptions, mostly preventive shutdowns, appear to be much larger for oil refiners than oil producers,” analysts at Julius Baer Group Ltd. including Patrick Jnglin said by email. This would mean “headwinds for crude oil but tailwinds for oil product prices.”
Gasoline for September delivery rose as much as 2.77 cents to $1.74 a gallon on the New York Mercantile Exchange and traded at $1.7380 at 8:37 a.m. local time. Prices added 2.7 percent on Monday after advancing to the highest price since July 2015.
West Texas Intermediate crude for October delivery rose 5 cents to $46.61 a barrel after dropping 2.7 percent Monday to $46.57. Brent crude added 4 cents to $51.93 on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $5.33 to WTI.
Flint Hills Resources LLC is planning to restart the Corpus Christi West refinery in Texas, according to a filing with regulators. The area near the Louisiana line has 1.65 million barrels a day of refining capacity, including Exxon Mobil Corp.’s Beaumont plant, according to Andy Lipow, president of Lipow Oil Associates LLC.
The storm has shut 3 percent to 4 percent of U.S. oil production and about a fifth of output in the Gulf of Mexico, RBC Capital Markets said in an emailed note.