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~ 9 MINUTES AGO U.S. gasoline prices jump as Hurricane Harvey knocks out Texas refineries Henning Gloystein

http://www.reuters.com/article/us-global-oil-idUSKCN1B802D?il=0

SINGAPORE (Reuters) - Gasoline prices hit two-year highs on Monday as massive floods caused by Hurricane Harvey forced refineries across the U.S. Gulf Coast to shut down.

In crude oil markets, Brent futures LCOc1 were pushed up by pipeline blockades in Libya, but U.S. crude futures eased.

Harvey came ashore over the weekend as the most powerful hurricane to hit Texas in more than 50 years, killing at least two people, causing large-scale flooding, and forcing the closure of Houston port as well as several refineries.

The U.S. National Hurricane Center (NHC) said on Monday that Harvey was moving away from the Texas coast but was expected to linger close to the shore through Tuesday, resulting in ongoing strong rainfall and flooding.

Spot prices for U.S. gasoline futures RBc1 surged 7 percent to a peak of $1.7799 per gallon, the highest level since late July 2015.

 

Texas is home to 5.6 million barrels of refining capacity per day, and Louisiana has 3.3 million barrels. Over 2 million barrels per day of refining capacity were estimated to be offline as a result of the storm.

About 22 percent, or 379,000 barrels per day (bpd), of Gulf production was idled due to the storm as of Sunday afternoon, according to the U.S. Bureau of Safety and Environmental Enforcement. There may also be around 300,000 bpd of onshore U.S. production shut in, trading sources said.

“There may be meaningful and long-term damage to Texas’ refining capacity,” said Jeffrey Halley, senior market analyst at futures brokerage OANDA.

To avoid a fuel shortage, U.S. traders were seeking to import oil product cargoes from North Asia to the United States, several refining and shipping sources told Reuters on Monday.

In crude, U.S. West Texas Intermediate (WTI) futures CLc1 were at $47.71 a barrel at 0305 GMT, down 16 cents, or 0.3 percent, from their last settlement.

“It may well be that the market feels the choke point in petroleum’s value chain is not (crude) production, but refined products,” Halley said.

If U.S. oil production is little affected, there could be excess crude with refiners unable to process it to produce fuel.

In international oil markets, Brent crude futures LCOc1 were stronger at $52.58 per barrel, up 17 cents, or 0.3 percent as Libyan pipeline blockades prevented three oilfields from supplying crude.

 

These opposing price movements pushed the WTI discount versus Brent to $4.99 per barrel on Monday, the widest since September 2015.

Although the full extent of the storm's damage is not yet clear, some analysts said the impact would be felt globally and affect energy markets for weeks, as numerous refiners shut down due to the floods.

Houston's port authorities said that all facilities would be closed on Monday due to the continued weather threat.

Reporting by Henning Gloystein; Editing by Kenneth Maxwell and Richard Pullin