Oil up in Harvey’s wake; Irma heads toward Florida

NEW YORK — Oil prices rose more than 1% on Wednesday as strong global refining margins and the reopening of US Gulf Coast refineries provided a more bullish outlook after sharp drops due to hurricane Harvey.

But traders remained wary of hurricane Irma, ranked as one of the five most powerful Atlantic hurricanes in the last 80 years, which was passing over the northernmost Virgin Islands on Wednesday afternoon and headed toward Florida at the weekend, raising concerns that it could knock out a major demand center and cause more fuel shortages.

There is also another tropical storm on Irma’s heels. Jose, heading for the Caribbean, strengthened to a hurricane on Wednesday and could become a major Category 3 storm by Friday.

Br e n t had gained 82 cents to settle at $54.20 a barrel.

US West Texas Intermediate crude futures were up 50 cents at $ 49.16 a barrel. Prices were little-changed after industry data showed US crude stockpiles increased the last week.

“Everyone is just grappling with the spate of storms that are populating the Gulf,” said John Kilduff, partner at Again Capital.

Many refineries, pipelines and ports that were shut due to Harvey 10 days ago are restarting.

On Tuesday, about 3.80 million barrels per day ( bpd) of refining capacity, or 20% of the US total, was shut, compared with 4.20 million bpd at the height of the storm.

“Refineries coming back online is putting a squeeze on supplies in the Gulf,” Mr. Kilduff said.

Crack spreads, a measure of refining profitability, have been constrained as crude prices have risen and gasoline futures have begun to be pared back.

Gulf Coast and Caribbean energy infrastructure began to brace for Irma. BP Plc said it would evacuate non-essential personnel from its Thunder Horse platform in the Gulf of Mexico, while Buckeye Partners has shut its Yabucoa oil terminal in Puerto Rico and was preparing for the storm at two other marine terminals in Florida and the Bahamas.

Oil terminals and distributors in Florida are tracking the storm, which could curtail fuel shipments to the state, which is largely dependent on waterborne deliveries of gasoline and diesel.

Around 250,000 bpd of refining capacity in the Dominican Republic and Cuba lies in the immediate path of Irma, Thomson Reuters Eikon data showed.

US crude stocks rose last week, while gasoline and distillate inventories drew as refinery utilization rates plunged 11.10 percentage points to 83.90% of capacity, data from industry group the American Petroleum Institute showed.

Adding to the longer term bearishness, the 280,000 bpd Sharara oil field, Libya’s largest, was gradually restarting on Wednesday after the lifting of a pipeline blockade. —