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London - Oil trimmed a fourth weekly decline as traders braced for impact of Hurricane Harvey on the US refining hub in the Gulf of Mexico. Gasoline futures surged to the highest in four months.
Front-month crude futures rose 0.5% in New York, paring Thursday’s 2% decline. Gasoline gained as much as 4.6%. While some oil and gas production has shut in the Gulf, the storm is bearing down on an area in the state of Texas that’s home to much of the US’s refining capacity.
If Harvey, currently a Category 2, makes the forecast landfall as a Category 3, it will be the strongest storm to hit since Wilma in 2005.
Oil in New York has lost almost 5 percent this month as investors weigh rising global output against supply cuts by members of the Organisation of Petroleum Exporting Countries and its allies. While Harvey has curtailed some US oil output, the greater impact could be on crude demand, with about 1 million barrels a day of refining capacity already shut down.
US gasoline prices surged as Harvey moved closer to the coast, and Citigroup estimates more than 2 million barrels of motor fuel output may be impacted by the storm.
“It’s the gasoline market which is reacting strongly to the hurricane, with refining capacity in Texas shutting,” said Hamza Khan, head of commodities strategy at ING Bank. Any “potential damage that refineries in the region experience once the storm makes landfall” could “provide further support to gasoline prices.”
West Texas Intermediate for October delivery was at $47.65 a barrel on the New York Mercantile Exchange, up 22 cents, at 14:36. Total volume traded was about 29% below the 100-day average. Front-month prices are down 1.8% this week.
US gasoline prices for September rose to $1.7406 a gallon, the highest intraday price for a front-month contract since April. Ultra-low-sulfur diesel climbed as much as 2% to $1.6530 a gallon.
Brent for October settlement gained 31c to $52.35 a barrel on the London-based ICE Futures Europe exchange. Prices are down 0.7% this week. The global benchmark crude traded at a premium of $4.68 to WTI.
Gulf Coast refineries in the path of the storm process almost 5 million barrels of oil a day. So far, four refineries and a condensate splitter in or around Corpus Christi are said to be shutting, with about 900 000 barrels a day of capacity. A refinery in Houston also reduced rates.
Oil-market news:
• OPEC’s Joint Ministerial Monitoring Committee, which oversees the implementation of cuts, plans to invite Nigeria and Libya to gatherings in Vienna next month, the group’s secretariat said in a statement.
• Venezuelan oil minister Nelson Martinez and state oil company president Eulogio Del Pino will switch roles as the South American country’s production wanes and money dries up.
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