PRICES RISE AS STORM SHUTTERS U.S. PLANTS

As many as 11 ports were shut, leaving 28 tankers laden with more than 18 million barrels of oil drifting offshore

HONG KONG

TROPICAL Storm Harvey has boosted petrol and dragged down crude as it spurred the shutdown of about a quarter of refining capacity in the world’s biggest oil user.

Front-month motor fuel prices rose 25 per cent last month, the biggest monthly gain in more than a year, and climbed above US$2 (RM8.54) a gallon on Thursday, while oil in New York capped its worst month since March this year.

About 4.4 million barrels a day of US refining capacity remains shuttered. The government plans to supply one million barrels of crude from the Strategic Petroleum Reserve to a Gulf Coast plant, the first emergency release in five years.

Oil in New York declined almost six per cent last month as Harvey crimped crude processing and investors weigh rising American output against global supply cuts led by members of the Organisation of Petroleum Exporting Countries.

As much as 10 per cent of US fracking work could be delayed after Harvey hit southeast Texas, according to Raymond James & Associates.

“The job for the market from here is to try and look through the impact of Harvey and discern what the general trend is when we come out the other side,” said Ric Spooner, an analyst at CMC Markets in Sydney.

“At this stage, the overall trend for oil looks mildly positive and it does look like there is progress towards a medium-term balance.”

Crude for October delivery fell 0.6 per cent to US$1.7686 a gallon on the New York Mercantile Exchange at 7:43am in London. The contract gained 8.7 per cent on Thursday.

September futures expired on Thursday after rising for an eighth session, climbing 13.5 per cent to close at US$2.1399, the highest for front-month prices since June 2015.

West Texas Intermediate (WTO) for October delivery lost 36 cents to US$46.87 a barrel on the New York Mercantile Exchange, down 2.1 per cent for the week.

Brent for November settlement slid 0.5 per cent, to US$52.62 on the ICE Futures Europe exchange. The global benchmark traded at a premium of US$4.92 to November WTI.

The Phillips 66 refinery in Lake Charles, Louisiana, will receive crude from the strategic reserve as part of an agreement requiring the company to replace the oil once supplies are flowing again.

As many as 11 ports were shut as Harvey hit the Texas coast, leaving 28 tankers laden with more than 18 million barrels of overseas oil drifting offshore as of Wednesday night.

The halt in US refining is presenting a rare opportunity for fuel traders in Asia, drawing shipments to America from as far away as Singapore. Bloomberg