Oil rises as dollar weakens, storm Harvey threatens
NEW YORK — Oil prices rose nearly 1% on Friday as the dollar fell and the US Gulf Coast braced for Hurricane Harvey, on track to become the biggest storm to hit the United States mainland in more than a decade.
The dollar, in which oil is priced, fell after Federal Reserve Chair Janet Yellen made no reference to US monetary policy in her speech at the annual central bank research conference in Jackson Hole, Wyoming.
Harvey strengthened into a powerful Category 3 storm, last located about 75 miles (120 kilometers) east- southeast of Corpus Christi, Texas, in the Gulf of Mexico and packing top sustained winds of 120 miles per hour (195 kph), the National Hurricane Center (NHC) said.
Refineries, terminals, onshore and offshore production operations and other infrastructure have shut or begun storm preparations with Harvey set to make landfall on the Texas coast on Friday night or early on Saturday.
The NHC, which has warned that catastrophic flooding was expected across portions of southern and southeastern Texas, expects Harvey to move slowly and linger over Texas for days.
Some tracking models show the storm could circle back out over Gulf waters after making landfall, and then take aim at Houston midweek, giving the nation’s four most populous city a double dose of rain and wind.
US crude futures settled up 44 cents, or 0.90%, at $47.87 a barrel but down 1.30% on the week.
Brent crude ended 37 cents, or 0.70%, higher at $52.41 and down 0.60% on the week.
US gasoline futures pared gains and ended a shade firmer after hitting their strongest levels in four months and the highest in three years for this time of year as traders booked profits and worries over supply shortages have already been priced in, market participants said.
Gasoline crack spreads, an indicator of refining profits, plunged 6% after it had surged about 12% on Thursday and hit the highest level seasonally in five years earlier on Friday.
Gulf Coast conventional cash gasoline prices for shipment on the Colonial Pipeline were seen hitting a near three-year high.
“The initial loss of refining capacity would tighten the availability of petroleum products, consistent with the rally in product prices, cracks, timespreads and differentials observed this week and historically,” Goldman Sachs said in a note. “On the demand side, gasoline typically suffers most during and after a hurricane with distillate demand supported instead by rebuilding activity.”
The US Energy department said it was ready to release crude oil from the nation’s emergency stockpile if needed in Harvey’s wake. A little less than 10% of offshore US Gulf of Mexico crude output capacity and nearly 15% of natural gas output had been halted by midday Thursday, government data showed. —