Gasoline rises as Harvey hits Texas
US gasoline futures rose to a two-year high on Monday as Tropical Storm Harvey pummeled the heart of America’s energy sector, while the euro hit a two-and-a-half-year peak after the European Central Bank president refrained from talking down the currency.
SINGAPORE — US gasoline futures rose to a two-year high on Monday as tropical storm Harvey pummeled the heart of America’s energy sector, while the euro hit a two-and-a-half-year peak after the European Central Bank president refrained from talking down the currency.
Following a subdued session in Asia as investors awaited damage estimates from the storm, financial spreadbetter LCG expected Germany’s DAX to open down 0.20% and France’s CAC 40 to start the day 0.30% lower. The UK is closed for a holiday.
US stock futures were down 0.20%, suggesting softer opening on Wall Street later in the day.
Gasoline futures soared as much as 6.80% at one point as the storm, which came ashore on Friday as the most powerful hurricane to hit Texas in more than 50 years, continued to batter the state.
The region is home to a quarter of US crude oil refining capacity, and some areas are expected to see a year’s worth of rainfall in the span of a week. At least two people have died so far, and the toll is expected to rise as the storm triggers additional tidal surges and tornadoes.
Harvey has knocked out a quarter of oil production from the Gulf of Mexico, prompting fears it could overturn years of US excess oil capacity and low prices.
Some US traders were seeking to import oil product cargoes from North Asia, refining and shipping sources told Reuters.
“The rain is expected to last through to Wednesday so the disruptions could last for some time yet,” said William O’Loughlin, investment analyst at Rivkin Securities in Sydney.
US economic growth more than halved in the quarter after hurricane Katrina mauled Louisiana in August 2005, but quickly bounced back by early 2006 as reconstruction began and gasoline prices moderated.
US gasoline futures were up 5.60% at 0535 GMT.
After surging on Friday, crude oil prices were mixed on Monday as markets tried to gauge Harvey’s impact on oil production and refinery demand.
Brent futures, the global crude oil benchmark, rose 0.30% to $52.56 a barrel, adding to Friday’s 0.70% increase. But US crude futures pulled back 0.40% to $47.70, paring Friday’s 0.90% increase.
Despite gains in energy shares across the region, MSCI’s broadest index of Asia-Pacific shares outside Japan rose less than 0.10%.
Japan’s Nikkei was little changed, but Japanese property and casualty insurers’ shares skidded as investors fretted about the broader impact of US storm.
Chinese blue chips rose 1.60%, extending summer’s blistering rally to nearly 11% after a raft of strong earnings; Hong Kong’s Hang Seng added 0.40% while Australian shares slid 0.70% and South Korea’s KOSPI fell 0.50%.
Markets mostly dismissed the firing of three short-range missiles by North Korea into the sea on Saturday, as the US and South Korea conducted annual joint military drills that the North denounces as preparation for war.
US Secretary of State Rex Tillerson said on Sunday the test was a provocative act but that the US will continue to seek a peaceful resolution.
The Korean won strengthened 0.80% to 1,119.90 won to the dollar as the greenback faltered.
The euro hovered near its highest level since January 2015, retaining gains made on Friday after ECB President Mario Draghi refrained from citing the common currency’s strength as a concern or discussing monetary policy specifically at a central bankers’ meeting in Wyoming. Instead, Mr. Draghi said ECB’s ultra-easy monetary policy was working and the euro zone’s economic recovery had taken hold.
The euro strengthened up to $1.19665 early Monday and was up 0.10% from its $1.19215 close on Friday, when it advanced 1% at $1.1931. —