Economy

Gasoline falls as refineries shut by Harvey prepare to reopen

Gasoline falls as refineries shut by Harvey prepare to reopen”

The refinery interruptions have worsened as Harvey moved east on Wednesday, slamming into the Louisiana coast near the Texas border.

Exxon Mobil Corp (XOM.N) said on Saturday it was restarting its 560,500 barrel per day (bpd) facility in Baytown, Texas, America's second-biggest oil refinery, after it was inundated by flooding.

"At least 20 tankers were booked to load European fuels for the USA since Harvey made landfall, a rate almost double the average for August, shipping data compiled by Bloomberg show".

Crude oil prices continued a downward trend Wednesday as Tropical Storm Harvey hovers over the southern United States and leaves refineries closed in its wake.

With Motiva down and other recent closures, about 25% of the nation's gasoline refining capacity is offline, GasBuddy petroleum analyst Patrick DeHaan said.

"I think we would be very comfortable tapping into that and providing that alleviated resource", homeland security adviser Tom Bossert said as quoted by Reuters.

But gasoline futures, which reflect wholesale prices and eventually trickle down to consumers, have started to spike again. It was originally going to Corpus Christi, Texas. USA refined products go to Latin America.

Others said the refinery closures would lead to a rise in crude inventories.

Drivers throughout the Bay Area and across the state should expect prices at the pumps to remain elevated for the next couple of weeks, even though California's gasoline doesn't come from Texas.

Furthermore, Brazil, Mexico and Venezuela all send heavy crude to the U.S. Gulf Coast for processing, and according to Quigley, these products have a limited number of alternative markets. An emergency fuel release by member countries was not yet necessary, the IEA said, with the market so far functioning to start moving petrol and diesel to where it is needed, including a flotilla of tankers heading to the U.S. from Europe.

One thing is for certain though: In a country like Venezuala, which is now facing USA sanctions imposed by the Trump administration amid the worst economic crisis in the country's history, any disruption in crude exports could be excruciating.

Worries over a dearth of fuel around the country were also partly alleviated by reports that pipelines affected by the storm were starting to return to normal, analysts said.

Analysts, however, say it's not yet due to any real shortage of product, but rather "panic buying" in anticipation of a shortage.

Because of state and federal regulations, California requires that all motorists use a specific blend of gasoline called California Reformulated Gasoline, or CalRFG for short, which is refined in the state.

An ETP spokeswoman did not respond to a request for comment on the terminal.

Market participant are likely to closely monitor the EIA's report on crude inventories slated for September 7, to assess whether the recent dip in crude demand will halt the nine-week trend of falling crude supplies. In addition, refineries that are still online are also slowing run rates.



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