February 24, 2018

Democratic Senator Urges Trump To Sell Oil In Strategic Reserves

03 September 2017, 08:56 | Frank Carlson

Oil dips as US floods cause large-scale refinery shutdowns (FP)

Harvey has taken 25 percent of oil and natural gas production offline

The prices in spot markets for gasoline in the Gulf have soared above benchmark prices in New York Harbor, according to Reuters data.

Refinery shutdowns created a short-term supply shortage of gasoline and diesel fuel, which sent prices exploding higher this week.

Higher gasoline prices could affect consumer spending nationally, but the impact "should be small and temporary as production and refining come back on line", according to Ryan Sweet of Moody's Analytics.

"Retailers can either go out of business or pass their costs along", said Tom Kloza, director of global energy analysis at the Oil Price Information Service. petroleum analyst Patrick DeHaan estimated Wednesday that gas prices would increase 15 cents to 25 cents per gallon nationwide as a result of Harvey - up from an initial forecast of 5 to 15 cents.

The Environmental Protection Agency may waive current restrictions and allow gulf coast refineries to produce winter blends of gasoline immediately.

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.

Refineries throughout the Gulf Coast shut down or reduced production a week ago in anticipation of the high winds and heavy flooding from Harvey.

Oil pulls back further as Harvey continues to weigh
Meanwhile, the API data on the decline in the reserves of "black gold" in the USA have little effect on the cost of oil. When the refineries were shut down last week, USA inventory was increasing at a rate of 1.4 million barrels per day.

"At least 20 tankers were booked to load European fuels for the US since Harvey made landfall, a rate almost double the average for August, shipping data compiled by Bloomberg show".

Tessa Sandstrom, spokeswoman for the North Dakota Petroleum Council, also said no impact is apparent as far as markets, although some companies report more difficulty in getting fix parts for oil-field equipment.

The U.S. Department of the Interior's Bureau of Safety and Environmental Enforcement said that about 13.5 percent of oil production in the Gulf of Mexico was shut in on Thursday due to the storm. The refinery interruptions have worsened as Harvey moved east on Wednesday, slamming into the Louisiana coast near the Texas border. That was the case after Hurricane Katrina in 2005, which shuttered major USA oil producers and refiners.

Last week, EIA said output climbed to 9.53 million barrels per day, nearing the record high of 9.61 million reached in June 2015.

International Brent crude was at US$50.86 per barrel, unchanged from the previous day, when the contract fell by more than 2 percent. Total SA's refinery in Port Arthur is out with a power loss, a person familiar with that plant said. "The U.S. exports distillates to Europe".

Analysts said the status of US refineries could be a key to oil prices going forward.

"Houston is home to refineries that represent about one-third of the country's refining capacity", she said Tuesday.

Mexico's state-run oil company Pemex, which heavily relies on USA fuel supplies, has over the past week booked at least seven cargoes of gasoline, or around 2.1 million barrels, from Singapore, Canada and Europe, according to the same sources.

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