U.S. crude price higher, gas falls as supply concerns ease

NEW YORK • U.S. crude oil prices edged higher on Monday while gasoline prices slumped to pre-Hurricane Harvey levels, as oil refineries and pipelines in the U.S. Gulf Coast slowly resumed activity, easing supply concerns.

U.S. West Texas Intermediate (WTI) crude futures were US8 cents higher at US$47.37 per barrel as U.S. demand recovered after being hit by reduced refinery activity since Harvey made landfall on Aug. 25.

Brent crude futures settled 41 cents lower at US$52.34, due in part to a shift away from crude markets to assets perceived to be safer, such as gold, after a powerful North Korean nuclear test.

Benchmark U.S. gasoline futures fell by more than three per cent, and retail prices edged up by only US1 cent a gallon on Monday, according to motorists advocacy group AAA, after climbing by more than 20 cents in the wake of Harvey, which was downgraded to a storm after making landfall as a hurricane.

NYMEX gasoline futures were down 3.28 per cent at US$1.6906 a gallon, a level last seen on Aug. 25.

Damage by Harvey to the oil infrastructure in the Gulf Coast appeared less extensive than some had feared.

A number of major refineries, which convert crude oil to refined products such as gasoline and jet fuel, were gradually resuming operations on Monday. Colonial Pipeline, the largest American fuel system, was restarting the distillates segment of its pipeline from Texas to New Jersey.

Its gasoline pipeline was due to resume operations on Tuesday, the company said.

At the same time, about 5.5 per cent of the U.S. Gulf of Mexico’s oil production, or 96,000 barrels of daily output, remained shut on Sunday, down from a peak of more than 400,000 bpd last week.

Texas Governor Greg Abbott estimated damage at US$150 billion to US$180 billion, calling it more costly than Hurricanes Katrina or Sandy, which hit New Orleans in 2005 and New York in 2012 respectively.