Oil sees slight recovery after hit from storm Harvey

Oil sees slight recovery after hit from storm Harvey

Oil sees slight recovery after hit from storm Harvey

Refiners in Corpus Christi that shut down ahead of the storm have said they are looking to restart, but more than 2 million barrels a day of refining capacity remains offline.

Meteorologists said that Harvey could be the worst storm in US history in terms of financial cost. However, inventories will likely rise from this week due to interruptions at refineries near Houston.

Analysts said the outlook for the Gulf Coast refining industry will be unclear until the rain stops and employees are able to return.

Elsewhere, the U.S. Commerce Department reported real gross domestic product increased at an annual rate of 3 percent during the second quarter, the strongest growth in more than two years.

As of Monday afternoon, prices in Texas had already risen about three cents from the week before - hardly a dramatic spike, though gas is usually headed the other way this time of year, Mac said.

This came on the back of record USA gasoline demand of 9.846 million bpd last week, and as US refining utilization rates rose to 96.6 percent, the highest percentage since August of 2015.

Research director Jackie Forrest of ARC Financial, meanwhile, says she expects Harvey's effect on the gasoline market could match that of Katrina 12 years ago and result in higher fuel prices in the USA and Canada that last until November. Tropical Storm Harvey has led to massive flooding.

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The ultimate effect on gas prices may depend on how long it takes for the Gulf Coast refineries to power up again.

Brent oil, the worldwide crude benchmark, settled down $1.14, or 2.2 percent, to $50.86 a barrel.

Minter said if the refiners can get back on line, they still need transportation channels to operate normally so they can distribute the product.

With gasoline futures climbing, the AAA said retail gasoline prices were up 6 cents from a week ago at $2.404 per gallon of regular gasoline nationwide. The reserve was created to deal with an embargo by foreign crude suppliers, in the wake of the embargo imposed in the early 1970s by the Arab members of the Organization of the Petroleum Exporting Countries. The Explorer Pipeline, which hauls about 660,000 barrels a day of gasoline, diesel, fuel oil and jet fuel from the Gulf Coast to the Midwest, was due to shut its main lines on Wednesday.

It added that the storm's impact would "linger for several more weeks".

"Severe flooding due to tropical storm Harvey is affecting refinery capacity and therefore crude demand, with the largest refinery in the US now operating at just 60 percent capacity", ANZ bank said in a note on Wednesday.

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