US benchmark petrol prices slid more than 4 per cent on Monday as refineries began to gradually restart operations after tropical storm Harvey struck the heart of the country’s energy sector.
Torrential rainfall and flooding along the US gulf coast hurt the operations of almost one-third of US oil refineries and curtailed flows along major fuel pipelines last week, driving up petrol prices to two-year highs. As several refiners — alongside terminals, drilling platforms and other facilities — sought to resume operations, Nymex RBOB futures contracts for October fell 4.2 per cent to $1.67 a gallon after reaching $2.17 a gallon last week.
ExxonMobil said on Saturday it was restarting its Baytown, Texas, refinery while Phillips 66 is preparing to resume operations at its Sweeny refinery, also in Texas. Valero also said it was increasing crude processing at several sites.
“This process may take several days or weeks to start producing product, depending [on] whether any damage is found during restart,” the US energy department said in its latest infrastructure security and energy restoration update. Colonial said it expected to reopen a Texas section of its fuel pipeline network, the country’s biggest, for distillates on Monday, with preparations under way to start moving petrol by Tuesday.
“Gasoline prices are . . . pulling back, yet past lessons have shown that the aftermath from such disruptions will linger for weeks, if not months,” said Stephen Brennock at London-based oil broker PVM. The US government authorised the release of 4.5m barrels of crude from the country’s strategic petroleum reserve, kept in underground caverns on the Gulf coast, to help working refineries meet any potential fuel supply disruptions.
US motorists faced higher prices at the pump ahead of the US Labor Day public holiday on Monday. Patrick DeHaan at retail fuel data company GasBuddy said all 50 states saw average petrol prices rise in the last week, with the national average up 27 cents a gallon to $2.64 a gallon. But any respite may be shortlived as attention shifts to hurricane Irma, which is moving towards the Caribbean and South Florida. As crude demand from refineries weakened, the international Brent oil benchmark and US marker West Texas Intermediate dipped last week. On Monday, Brent ticked lower by 7 cents to $52.68 a barrel. WTI edged 26 cents higher to $47.54 a barrel.
Tankers carrying petrol from Europe and Asia were diverted to refineries in Mexico and other countries in Latin America that are dependent on US-refined products. But any rebound in US refinery operations may stall the number of diverted tankers. Three tankers carrying gasoline resumed their journeys to New York after an initial move towards the south, vessel tracking data show. Tankers Gan-Tribute, Lake Sturgeon and SCF Anadyr arrived in New York harbour over the weekend.
SOURCE: Financial Times
Compiled and Published by GIB KNIGHT
Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma.