Oil Markets React Stoically To Strong Crude Inventory Draw

In addition to shutting oil refineries, about 1.4 million bpd of United States crude production has been disrupted, equivalent to 15 percent of total output, Goldman Sachs said. "We have no idea when (the refineries will) come back on, the market is taking a wait and see approach".

The effects of Hurricane Harvey are expected to be felt more than 1,200 miles away in Wisconsin. Florida's average price was $2.31. It used the storm as an opportunity to remind policy makers that embattled East Coast refiners are critical to domestic energy security.

As of Tuesday morning, GasBuddy.com showed the average price in Tulsa at $2.16.

Oil tankers were unable to reach the refineries and the U.S. Bureau of Safety and Environmental Enforcement said that workers had been removed from 105 of the 737 manned platforms used to pump oil and gas from beneath the Gulf.

The shutdown of about 2.2 million barrels, or 12 percent, of US refining capacity drove gasoline prices up as much as 6.8 percent since Friday.

As long as production isn't stalled long-term from the hurricane, it's not likely that oil prices are going to jump up significantly, he said.

Marathon Petroleum Corp was shutting two refineries in the Houston area on Tuesday because of flooding, according to sources familiar with plant operations. The company said in an update that it would seek "to determine the availability of necessary transportation and logistics infrastructure to resume refinery operations". "Any hiccup in U.S. refined product exports is highly disruptive to the supply chain given the dependency of nations like Mexico and other Latin American countries on the U.S.", Michael Tran, director of global energy strategy at RBC Capital Markets, told Reuters.

Traders remained focused on dissecting how Harvey will affect refinery operations as it moves into Louisiana. Fuel prices were expected to keep rising as refining capacity remains down and pipelines run short.

USA refiners have been affected more than oil producers by Harvey, which has now been downgraded to a tropical storm. Operations were stable at the largest USA crude refinery, Motiva Enterprises' 603,000-bpd Port Arthur plant, the company said.

Almost a third of USA refining capacity sits in low-lying areas along the coast from Corpus Christi, Texas, to Lake Charles, Louisiana, all of which have been or are likely to be affected by the storm.

Oil has lost nearly 7 percent this month as investors weighed signs of rising global output against production cuts by some members of the Organization of Petroleum Exporting Countries.

The U.S. Northeast was already dealing with reduced supply. Among the companies cited in the report as shutting down refineries are ExxonMobil, Valero, Citgo, Shell, and Philips 66.

Hurricane Harvey pummeled the Gulf coast of Texas, making landfall as a category 4-storm.

Many of those jobs were in large oil companies, and according to Hathaway, those companies don't significantly ramp up oilfield activities in response to temporary trends or price increases.

Latest News