USA gasoline prices soar on Texas floods

Randall Padilla
September 3, 2017

Gasoline prices, however, retreated from two-year highs on Friday as two refineries began to restart, narrowing the "crack spread" - the difference between crude oil and gasoline prices - from recent highs.

In Latin America, the largest buyer of U.S. fuels, oil companies have been scouring the globe to find other supplies of gasoline and distillates to compensate for the U.S. Gulf Coast refinery outages. The nation can process about 18.6 million barrels a day, of which about 9.7 million barrels a day is in the region including Houston.

AAA said the $2.28 per gallon cost, put into historical context, is the second lowest Labor Day weekend price in the past 13 years.

The largest refinery in the temporarily shutting down following devastating local floods from Hurricane Harvey and the aftermath, adding to a raft of factors driving gasoline prices higher.

"An immediate release of gasoline or crude oil, if also warranted, from the SPR would help protect consumers from price spikes at the pump and tame any market speculation that could be unduly affecting markets and harming consumers", Markey wrote, according to The Hill. It was still on track to close the month down just under 6 percent, the steepest monthly loss since March.

By 4:36pm EST, WTI was trading at $46.38 with Brent Crude trading at $51.96.

While most auto owners are feeling the strain at the pump, others are saying it's nowhere near as bad as previous years thanks to their fuel efficient vehicles.

"The market has turned in reverse pretty sharply", said Gene McGillian, anager of market research at Tradition Energy.

"We're continuing to assess the refining sector and its ability to come back from Harvey", said John Kilduff, partner at energy hedge fund Again Capital LLC. "You do have some signs of rebalancing, regardless of Harvey", he said.

Others saw potential for operational refineries to delay typical September seasonal maintenance to benefit from high prices.

It is also home of the Louisiana Offshore Oil Port (LOOP), the largest privately owned USA crude storage terminal.

This development is said to be frustrating for OPEC countries now restricting oil supplies in an attempt to push prices higher. We have plenty of oil in the country, so why tap into our emergency reserves?

The move to a backwardated curve in mid-August was generally viewed by market participants as proof that crude oil was re-balancing, and that the efforts of the Organization of the Petroleum Exporting Countries (OPEC) and its allies to restrict their output were finally paying off.

At the same time, the amount of crude entered into refineries reached a record high of 17.73 million bpd, the data showed.

One thing is for certain though: In a country like Venezuala, which is now facing US sanctions imposed by the Trump administration amid the worst economic crisis in the country's history, any disruption in crude exports could be excruciating.

The trend for shrinking oil stocks and expectations for an uptick in global oil demand growth meant analysts polled on a monthly basis by Reuters raised their oil price forecasts for the first time in six months.

Other reports by AllAboutTopnews

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