Energy Dept. Taps Into Oil Reserves as Gas Prices Rise Nationwide
- Author: Eleanor Harrison Sep 01, 2017,
Sep 01, 2017, 1:48
"These closures are already impacting markets, with crude prices lower on a perceived drop in demand and gasoline prices spiking in response to lower supply", said Sandy Fielden, director of oil and products research at Morningstar. The region from Corpus Christi, Texas, where Harvey made landfall, to the Louisiana state line accounts for about 3 percent of the US economy and is a crucial export market for oil and chemicals. The lack of fresh news and uncertainty over the flood damage may be causing this.
With Motiva down and other recent closures, about 25% of the nation's gasoline refining capacity is offline, GasBuddy petroleum analyst Patrick DeHaan said.
Oil prices have fallen marginally, while gasoline prices have risen to their highest since mid-2015 due to extensive flooding following storm Harvey that forced a quarter of refineries in the U.S. to stop production.
That includes the biggest US refinery, Motiva's Port Arthur facility, which can handle more than 600,000 barrels a day.
Numerous shipments are expected to end up in Latin America, which has become increasingly reliant on gasoline and diesel supplies from the U.S. Gulf Coast in recent years amid fast-growing demand in emerging economies such as Mexico and Brazil, traders said.
"This is going to be the worst thing the USA has seen in decades from an energy standpoint", said an East Coast market source, who did not want to be identified because he was not authorized to speak to the press.
The Northeast Gasoline Supply Reserve, set up after Hurricane Sandy caused fuel supply disruptions in 2012, holds 1 million barrels of motor fuel at three sites in New York Harbor, the Boston area, and Maine.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at US$46.35 per barrel at 0155 GMT, down 9 cents from their last close.
The Motiva shutdown sent after-settlement gasoline prices up to 1.8180.
Today, Brent and USA crude futures are rising.
In Texas, Shell was assessing the impact of Harvey, but a spokesman did not respond to a question about the status of its Sugarland terminal in St. James, used for crude exports.
Goldman Sachs said it could take several months to restore all production. Transfers from one ship to another near the port have also been delayed, sources said.
An ETP spokeswoman did not respond to a request for comment on the terminal. Bears are battering WTI as crude oil remain landlocked in the United States as Houston port has remained closed.
The shale revolution didn't exist when Hurricanes Katrina and Rita pummeled the Gulf a decade ago and sent gas prices soaring.
At least two East Coast refineries have run out of gasoline for immediate delivery as they scrambled to fill barges for markets normally supplied by the Gulf Coast, two refinery sources said.