Gaso­line jumps; oil mixed as storm hits re­finer­ies

Business World - - WORLD MARKETS -

NEW YORK — US gaso­line fu­tures jumped 4% while crude prices were mixed on Tues­day af­ter a hur­ri­cane shut down more than 19% of the coun­try’s re­fin­ing ca­pac­ity, curb­ing fuel pro­duc­tion and fur­ther bloat­ing crude in­ven­to­ries.

Gaso­line rose still higher post­set­tle­ment, af­ter sources told Reuters that Mo­tiva was shut­ter­ing the largest US re­fin­ery. That meant at least 3.65 mil­lion bar­rels per day ( bpd) of re­fin­ing ca­pac­ity was off­line, or 19.60% of to­tal US ca­pac­ity, based on com­pany re­ports and Reuters es­ti­mates. The Gulf is home to nearly half of US re­fin­ing ca­pac­ity.

“Be­cause that de­mand is gone that’s where the sell­ing pres­sure in the mar­ket is com­ing from,” said Gene McGil­lian, man­ager of mar­ket research at Tra­di­tion En­ergy. “We have no idea when (the re­finer­ies will) come back on, the mar­ket is tak­ing a wait-and-see ap­proach.”

US West Texas In­ter­me­di­ate ( WTI) crude edged down 13 cents or 0.30% to $46.44 a bar­rel. In­ter­na­tional Brent crude fu­tures closed up 11 cents or 0.20% to $52 a bar­rel. The dis­count for US WTI ver­sus Brent reached $5.92 a bar­rel on Tues­day, its widest in more than two years.

US gaso­line fu­tures jumped 4% to end 1.7833, the high­est in more than two years.

Af­ter set­tle­ment, sources told Reuters that Mo­tiva En­ter­prises was shut­ting down the na­tion’s largest re­fin­ery due to floods. Mo­tiva has al­ready been re­duc­ing pro­duc­tion at the 603,000 bpd Port Arthur, Texas, re­fin­ery as flood wa­ters con­tin­ued to in­un­date the area.

The Mo­tiva shut­down sent af­ter-set­tle­ment gaso­line prices up to 1.8180. Prices would be higher if not for record re­fin­ery runs in 2017, said Matt Smith, di­rec­tor of com­mod­ity research at Clip­per­data. “They’re not spik­ing as much as they would have had we not had the back­drop of plen­ti­ful in­ven­to­ries,” said Mr. Smith, not­ing gaso­line sup­plies sit at a five year high for this time of year.

More than 18% of oil pro­duc­tion in the Gulf of Mex­ico was shut in, the US De­part­ment of the In­te­rior’s Bureau of Safety En­vi­ron­men­tal En­force­ment said. Still, trop­i­cal storm Har­vey, which was down­graded from a hur­ri­cane, hit re­fin­ers harder.

Af­ter set­tle­ment, in­dus­try group the Amer­i­can Pe­tro­leum In­sti­tute said its data showed that last week US crude stocks fell, while gaso­line in­ven­to­ries in­creased and dis­til­late stocks drew.

Crude mar­kets were also eye­ing dis­rup­tions in Libya and Colom­bia.

Yet crude re­mains in am­ple sup­ply. Jef­feries bank said it was low­er­ing its fourth-quar­ter Brent oil price es­ti­mates to $55 a bar­rel from $60 and its 2018 fore­cast to $57 from $64. —

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