Crude oil prices surge as refiners move back into action after Hurricane Harvey, but demand strains increase ahead of Hurricane Irma. File photo by Monika Graff/UPI |
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Sept. 6 (UPI) -- Crude oil prices continued to recover Wednesday in response to weather events in a U.S. energy sector expected to take weeks to rebound from Hurricane Harvey.
The price for West Texas Intermediate, the U.S. benchmark for the price of oil, soared dramatically in Tuesday trading after signs of emerging recovery in the U.S. Gulf Coast energy market. U.S. crude oil was forced into storage as many of the refinery centers in the region were shut in by Harvey, which made landfall in Texas as a Category 4 hurricane in late August.
Motiva's refinery in Port Arthur, Texas, the largest in the United States, was the latest to announce a phased restart process was underway, though only about 40 percent of the 600,000 barrels per day in capacity would be available by the weekend. In its latest incident report, the U.S. Energy Department said six refineries were still shut down, an improvement from the dozen or so closed at the peak of the storm.
"Five refineries are in the process of restarting after being shut down," the department's latest report read. "This process may take several days or weeks to start producing product, depending whether any damage is found during restart."
Recovery still unlocked some barrels held in storage, though demand pressures for parts of the U.S. East Coast could complicate matters as Hurricane Irma, a Category 5 storm, heads toward the region.
WTI was up 1.1 percent at 9:04 a.m. EDT to $49.21 per barrel. The price for Brent crude oil, the global benchmark, was up 1.37 percent to $54.11 per barrel, close to a three-month high.
The U.S. Energy Department said it was monitoring Irma closely as, with no refineries of its own, Florida could face severe gasoline shortages.
"Oil markets this week will continue to be a weather market," Switzerland-based consultant Petromatrix said in an emailed report.
As of Aug. 25, gasoline stocks in the region were near the high-end of the five-year average. There were more than 50 oil vessels still waiting to drop anchor off the coast of Texas. That represents about 38 million barrels of crude oil.
WTI has made up considerable ground, gaining about 6 percent from last week. An emailed research note from London oil broker PVM said WTI may be "a bit overcooked."
Traders are anticipating oil and gas inventory data from the American Petroleum Institute, due out late Wednesday, and from the U.S. Energy Information Administration, due Thursday, to get a gauge of the impact from Harvey.
A market survey emailed by commodity pricing group S&P Global Platts forecast a decline in gasoline stocks of 4.2 million barrels and a build in U.S. crude oil inventories of 2.7 million barrels for last week.
