From Bloomberg
Gasoline surged in New York, extending its longest rally since 2013 as an important conduit of fuel from the Gulf of Mexico to the U.S. East Coast began to close due to the effects of Tropical Storm Harvey.
Motor-fuel prices climbed as much as 8 percent in New York, advancing for an eighth session. Harvey has shuttered about 23 percent of U.S. refining capacity, potentially cutting fuel-making ability to the lowest level since 2008 and depriving the Colonial Pipeline of supplies. Its operator was forced to shut the main diesel line late Wednesday and planned to halt its gasoline line Thursday, meaning motorists from Maine to Florida may soon see higher prices at the pump.
As gasoline surged to a two-year high, U.S. oil prices lost more than 3 percent since Harvey made landfall as demand from refiners fell. This sent cracks — the premium of the refined fuel over crude — higher in New York, while the storm also triggered a flurry of trans-Atlantic gasoline trading and disrupted exports of liquefied petroleum gas, causing prices to rise in Asia.
“Harvey is driving cracks to the sky,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “Crude-oil prices have declined while oil-product prices have increased.”
Gasoline for September delivery, which expires Thursday, advanced as much as 15.07 cents to $2.0354 a gallon on the New York Mercantile Exchange, the highest in more than two years. The more-active October contract rose 2.4 percent to $1.6764 as of 9:03 a.m. local time.
Flooding and power failures have reduced U.S. fuel-making capacity by about 4.25 million barrels a day. Now that Harvey has moved east, making a second landfall near the Texas-Louisiana border on Wednesday, Valero Energy Corp., Citgo Petroleum Corp. and Flint Hills Resources LLC are preparing to restart refineries at Corpus Christi, close to where the storm first hit on Friday, according to regulatory filings and people familiar with the matter.
The U.S. energy secretary has authorized the release of 500,000 barrels of crude from the Strategic Petroleum Reserve to a refinery in Lake Charles, Louisiana, according to a spokeswoman.
West Texas Intermediate crude for October delivery was up 40 cents at $46.36 a barrel on the New York Mercantile Exchange. Brent for October settlement, which expires Thursday, also rose 40 cents to $51.26 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $4.99 to WTI.
Traders have booked 20 tankers to load European fuels to the U.S. since Harvey made landfall on Aug. 26, according to charter lists compiled by Bloomberg. The rate of bookings is about double the average for August.
