Economy

Gas prices jump ahead of Labor Day weekend

Gas prices jump ahead of Labor Day weekend”

"We're certainly looking at a slightly different market dynamic than we did last time we had a big weather event like this".

The ExxonMobil Baytown refinery, the second largest refinery, has had some flooding and also could be down for up to four weeks.

Traders have hired vessels to ferry at least 105,000 tons of processed products from Singapore to America next month, and are seeking to charter more. On Tuesday, the average price was $2.250 in North Carolina.

The industry group says a bad hit could mean as much as a 25-cent jump nationwide in the coming days, if a refinery is damaged and has to shut down for lengthy repairs.

The reserve, established in the early 1970s after the Arab oil embargo caused panics over fuel supply, now contains 679 million barrels of oil.

"With sharply rising flows from Europe to the U.S. Gulf, we're also seeing a massive spike in crack spreads", Carsten Fritsch, an analyst at Commerzbank AG, told Bloomberg in an interview.

The impact on crude production is lower than the refinery impact, with about a million barrels per day offline, or about 11 percent of total United States output, according to Goldman Sachs. A year ago, the average was $2.097, according to their data. The margin was less than $6.50 on Monday.

US inventory data is expected to skew dramatically in the coming weeks and perhaps months as the closure of the Houston Ship Channel brings down imports and exports of crude oil.

While much of the region's refining infrastructure still remained offline from Harvey, which made landfall as a Category 4 hurricane last week, the restarts were a first step in alleviating concerns about USA fuel supplies. Americans continue to consume about 9.7 million barrels per day - a 2 million barrel deficit, DeHaan said. That's considerably lower than the national average of $2.40.

Almost one-third of the nation's refining capacity is along the Gulf Coast from Corpus Christi, Texas, to the Lake Charles, Louisiana area, and about one-quarter of the Gulf Coast's oil refining capacity was taken offline, according to the Oil Price Information Service.

"Crude oil has taken it quite badly because of all of the refining capacity that has been shut in", Ole Hansen, head of commodity strategy at Saxo Bank A/S, said by phone from Copenhagen.

The storm, which lashed Louisiana with rain on Thursday, has pummeled the U.S. Gulf Coast, immersing Houston, Texas, and the surrounding area in several feet of water and forcing the closure of about a quarter of U.S. refining capacity. Another 418,000 barrels per day of various refined products and unfinished oils were imported into Texas in May. The Brent contract for October, which expired on Thursday, closed up $1.52 at $52.38.

How much, if any, of that increases relies on how Tropical Storm Harvey devastates refineries along the Gulf.



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