Economy

Oil Prices Set To Rise as Supply-Demand Gap Closes Up

Oil Prices Set To Rise as Supply-Demand Gap Closes Up”

US oil prices are rising today, while gasoline futures also raced higher, hitting prices last recorded nearly two years ago.

Colonial is not the only major fuel pipeline to shut down.

"Given the unprecedented flooding in the city of Port Arthur, it remains uncertain how quickly the flood waters will recede, so we can not provide a timeline for restart at this time", the company told AFP.

President Donald Trump has proposed selling almost half the petroleum reserve amid an oil production boom that has seen USA imports drop sharply in the past decade.

"In response to the impacts from Hurricane Harvey, the U.S. Secretary of Energy has authorized the Strategic Petroleum Reserve (SPR) to negotiate and execute an emergency exchange agreement with the Phillips 66 Lake Charles Refinery". Tankers have been booked to transport gasoline from Europe to the USA, and the fuel is now set to be shipped over even longer distances as the premium of American prices soar relative to those in Asia, the world's biggest oil market.

Part of the pipeline that runs through Texas is shut down and inspections must be done before the entire system can be fully operational again, Colonial Pipeline spokesman Steve Baker said Thursday.

Already, gasoline prices in the USA have hit $2 per gallon for the first time since 2015, according to Reuters, as flooding from Harvey knocked out nearly a quarter of us refineries, while the storm moves inland over Louisiana.

On Aug. 4, the lowest prices registered in the area ranged between $1.99 and $2.14 per gallon, according to the site. Gasoline prices in the region were $16.34 a barrel, also the highest since January 2016.

"We could see rising USA crude inventories in the next couple of weeks until demand from refineries recovers".

"There's a tendency for markets to overreact and expect the worst, and I think that's what's were in this week", said George Hoffer, an economics instructor at the University of Richmond specializing in transportation economics. With its supplying refineries closed in the area, the pipeline operator cited reduced output as the reason for suspending its transportation operations.

"Cross our fingers, keep our tanks full", Orlandi said.

The global effects were being felt in Venezuela, where financially strapped state-run PDVSA is facing the possibility that scheduled deliveries - tankers floating offshore for weeks due to non-payment - will make their way to other Latin American destinations.

Gasoline prices passed new milestones today as the damage caused by Hurricane Harvey continued to mount.

A spokeswoman for the office said as of Thursday afternoon there have been 202 complaints of price-gouging at service stations around Texas since Harvey began.

Among those states, the highest 24-hour rise on average was in South Carolina, AAA reported. The key pipeline was knocked offline because there isn't enough gasoline flowing for it to operate.

"We are going to have outages from Texas to Boston", said one East Coast market source.

Elsewhere on Nymex, gasoline futures for October slid 0.71% to $1.761 a gallon. Concerns were mounting ahead of the US Labor Day extended weekend.



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