US oil falls 2% as refiners brace for Hurricane Harvey
Rigzone/24 August 2017
NEW YORK, Aug 24 (Reuters) – U.S. crude prices fell 2 percent on Thursday as Hurricane Harvey, forecast to come ashore as the strongest storm to hit the U.S. mainland in 12 years, threatened oil operations along the energy hub on the U.S. Gulf Coast.
U.S gasoline futures, however, jumped 2.8 percent and gasoline cash prices in the Gulf Coast rose to the highest levels in almost a year on fears of the hurricane and flooding damaging refineries.
The U.S. National Hurricane Center said that Harvey was rapidly intensifying and expected to make landfall Friday night or early Saturday on the Texas coast, whilst warning of a storm surge or the danger of life-threatening flooding.
Harvey is forecast to come ashore as a Category 3 hurricane, the NHC said, with winds of up to 129 miles (208 km) per hour. Hurricane Wilma, which struck Florida in 2005, was the last Category 3 hurricane to make landfall in the United States.
“There are worries about the effect of Harvey,” said Gene McGillian, manager of market research at Tradition Energy in Stamford, Connecticut. “Refineries might go down because of flooding.”
Around 10 percent of the Gulf Coast region’s approximately 9.75 million barrels per day of refining capacity was shut in, according to a Reuters estimate.
Two refineries in Corpus Christi, Texas – Flint Hills Resources’ 296,470 barrels per day plant and Citgo Petroleum’s 157,000 bpd plant – were shutting down operations in preparation of the storm.
Exports of oil and condensates would also be affected as NuStar Energy and Magellan Midstream Partners were also shutting down their Corpus Christi terminals ahead of Harvey.
U.S. crude futures settled 98 cents lower at $47.43 a barrel and Brent crude ended down 53 cents a barrel, or 1 percent, at $52.04.
Storm preparations, however, also shut in crude production, which was supportive.
Almost 10 percent, or the equivalent of 167,231 bpd, of current oil production in the U.S. of Mexico has been shut in, the Bureau of Safety and Environmental Enforcement said.
Royal Dutch Shell, Anadarko Petroleum and Exxon Mobil have all taken steps to curb some oil and gas output at platforms in the Gulf.
Onshore, Statoil said it was evacuating staff from the Eagle Ford shale region and will close wells on a case-by-case basis depending on flooding risk. [nL2N1LA190
ConocoPhillips also said it was suspending drilling the Eagle Ford sand idling five rigs ahead of the hurricane.
A slightly stronger dollar, which makes greenback-denominated crude more expensive for buyers in other currencies, also weighed on the oil market as investors eyed a meeting of central bankers that begins on Thursday in Jackson Hole, Wyoming.
The meeting, which could signal changes to monetary policy, will include speeches by U.S. Federal Reserve Chair Janet Yellen on the outlook for monetary policy and interest rates.
News Source: Rigzone