Hurricane Harvey hits US refinery output

Storm knocks out 20% of capacity and prices surge on fears of shortages

 

A flotilla of European fuel tankers is preparing to sail to the US in the wake of tropical storm Harvey, as oil traders scramble to replace supplies of petrol knocked out by the worst storm to hit Texas in 50 years.

Shipbrokers in London said almost 40 cargoes of petrol had been booked or were being negotiated so far this week, well up on the usual volume, and traders were asking for flexibility to deliver either to the Atlantic seaboard or the Gulf Coast depending on when ports may reopen.

Harvey has knocked out more than a fifth of US oil refining capacity, or roughly four million barrels a day, sparking fears of fuel shortages and driving wholesale petrol prices up 20 per cent to the highest level in two years.

Harvey, which started as a hurricane and then became a tropical storm, made renewed landfall yesterday in eastern Texas and Louisiana, forcing more oil refineries to close.

The benchmark US gasoline contract for delivery into New York Harbor in September jumped more than 5 per cent yesterday to $1.90 a gallon, and is up from $1.58 a gallon a week ago.

The price rise could, however, be shortlived if refineries are able to return to operations or as additional imports start to arrive. The October gasoline futures contract was trading about 25 cents lower at $1.66 a gallon.

Pipelines that carry fuel from the refining hub on the US Gulf to population centres in the east and midwest have also been shut or forced to run at reduced rates by the unprecedented flooding hitting Houston, risking spreading the impact across the US. – Copyright The Financial Times Limited 2017