U.S. crude oil futures fell on Monday but gasoline prices surged to 2-year highs as Tropical Storm Harvey kept hammering the U.S. Gulf Coast, knocking out several refineries which backed up crude supplies and disrupted fuel production, Reuters reports.
Just now, a Reuters report says the largest refinery in the United States is considering a shutdown.
"This flooding issue could be a persistent issue with the staff unable to repopulate the facilities", said John Kilduff, partner with energy hedge fund Again Capital in NY.
Crude prices were mixed in Asian trade Monday as the closure of refineries in USA oil heartland Texas due to monster storm Harvey was offset by sluggish global demand.
US crude settled down $1.30, or 2.7 percent, at $46.57 a barrel. But MRs may get more work in Europe to bring gasoline cargoes to the US.
In early afternoon trade in Asia, Brent crude for October was trading at $52.57 a barrel, up 16 cents or 0.31 percent.
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Harvey made landfall in Texas late on Friday as the most powerful hurricane to hit the region in more than 50 years and caused large-scale flooding, forcing refineries in the area to close.
USA authorities said 22 percent of crude production in the Gulf of Mexico was halted, while global energy information provider S&P Global Platts said roughly 2.2 million barrels per day of refining capacity was also affected. Estimates say the storm has taken at least 2.4 million bpd of refining capacity offline.
Analyzing the storm is tricky but what's increasingly clear is that it will have a much bigger effect on refining than on production.
"If (US) refineries shut down for more than a week, Asia will need to run at a higher level, because there's no spare capacity in Europe", said Olivier Jakob, managing director of Petromatrix.
In Libya pipeline blockades by militia brigades have slashed the OPEC state's output by almost 400,000 bpd. Analysts polled by Reuters forecast that US crude inventories fell for the ninth straight week, while refined products also declined.