Global fuel prices jump on Harvey’s impact
Hurricane could impact debt ceiling deadline, says US Treasury Secretary
Tropical storm Harvey's impact on the energy industry spread worldwide as flooded US refiners and closed fuel pipelines threatened to squeeze national supply, roiling global fuel markets and rerouting millions of barrels of fuel to the Americas to avert shortages.
The storm, which lashed Louisiana with rain on Thursday, has pummeled the US Gulf Coast, immersing Houston, Texas, and the surrounding area in several feet of water and forcing the closure of about a quarter of US refining capacity.
Benchmark US gasoline prices and margins surged anew on Thursday. The jump came after the Colonial Pipeline, the biggest US fuel system, said it would shut its main lines to the Northeast by Thursday amid outages at pumping points and lack of supply from refiners.
That artery can carry 3 million barrels of gasoline and other products daily.
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.
Global oil prices rose 1 per cent on Thursday, clawing back some of the losses made a day earlier, but US crude is on track for the steepest monthly losses in more than a year on demand concerns after floods knocked out a quarter of US refining capacity. International benchmark Brent crude was up 58 cents, or 1.1 percent, at $51.44 a barrel. US West Texas Intermediate (WTI) crude futures were set to close the month down 7 per cent, their steepest monthly loss since July 2016. They were trading 1.4 per cent up at $46.58 a barrel at 1352 GMT.
Later on Thursday, US Treasury Secretary Steven Mnuchin said the impact of Harvey could bring forward the deadline by which the nation's debt ceiling needs to be raised and that he is open to the borrowing cap being dealt with as part of a wider bill.
"This is going to be the worst thing the US has seen in decades from an energy standpoint," said an East Coast market source, who declined to be named as he was not authorised to speak to the press.
On Thursday, the US Energy Department said it would release 500,000 barrels of crude oil from the Strategic Petroleum Reserve to supply the refineries that are still running in an effort to stem fuel shortages.
The first emergency release from the reserve since 2012 will be delivered to the Phillips 66 refinery in Lake Charles, Louisiana, according to a department statement. US gasoline futures topped $2 per gallon for the first time since 2015, up more than 20 per cent since just before the storm began, while US crude oil prices were on track for their steepest monthly losses in more than a year.
Explosions at a chemical plant near Houston posed a fresh worry for Texas. The smoke erupted when chemicals stored at an Arkema plant burst into flames after the refrigerator cooling the truck trailer they were stored in failed.