Energy chief taps emergency oil reserve in wake of Harvey

Energy chief taps emergency oil reserve in wake of Harveyā€¯

Brent crude futures were down 7 cents, at United States dollars 51.93 per barrel.

US gasoline futures were up 5 percent at $1.8732 a gallon, having earlier hit $1.9009, the highest since July 2015.

"When refineries are not able to run on the USA coast, WTI light sweet crude is accumulating in Cushing, pushing down the price there", said Bjarne Schieldrop, chief commodities analyst at SEB Markets. Some refineries were preparing for restarts, but heavy rains are expected to last through Wednesday, adding to catastrophic flooding in Houston.

A big fall in the previous week's U.S. crude inventory volumes was ignored by traders.

Refineries with output of at least 4.4 million barrels per day (bpd) were offline on Tuesday, representing almost 24 percent of U.S. production, according to Reuters estimates and company reports. By afternoon, they had climbed 9 cents to $1.87 a gallon.

Another key: the shale oil boom has encouraged US refiners, many of which are along the Gulf Coast, to produce more and more gasoline.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were trading at $45.84 per barrel at 0024 GMT, down 12 cents, or 0.3 percent, from their last close.

And higher prices are starting to lure more fuel from overseas.

Tropical Storm Harvey, which has now been downgraded from a hurricane, hit oil refiners harder than crude producers.

"There's plenty of crude oil", said Tom Kloza, global head of energy analysis at the Oil Price Information Service.

"Refineries outside the affected area may delay maintenance to benefit from high processing margins", said Commerzbank (Xetra: CBK100 - news) oil analyst Carsten Fritsch.

"It takes some time to start up a refinery under normal circumstances, and it wouldn't be surprising if they run into hiccups", said Smith, the HIS Markit analyst.

Harvey shut down about a quarter of the country's refining output after it lashed Houston with record floods before it spread to the Louisiana coast, another refining hub.

The Energy Department will review other requests for oil from the Strategic Petroleum Reserve, an emergency stockpile that guards against supply disruptions, a spokeswoman said. However, the assessment does not include the impact of storm Harvey.

Crude markets were also looking at disruptions in Libya and Colombia.

Other sectors are also slowly emerging from Harvey's mess.

Gasoline for September delivery shot ahead over 13% in Thursday action to $2.147; that's the highest price since June 2015 and largest one-day gain in about over 17 months.

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