Oil rose and gasoline eased gains amid anticipation of Hurricane Harvey.
Crude futures in New York settled 0.9 percent up on Friday, paring a weekly loss to 1.3 percent.
Gasoline futures eased gains, after surging as much as 4.6 percent during the day.
Several oil and natural gas platforms have shut as the storm bore down on an area of the Texas coast that is home to a significant portion of the US’ refining capacity.
“You’re going to see some disruption in imports. This is a bullish event for crude, but tempering that is you’ve got a lot of refining activity in that part of the world,” Bill O’Grady, chief market strategist at Confluence Investment Management in St Louis, said by telephone. “You’ll have less imports, but you’ll also see a drop in refining activity.”
Oil in New York has lost about 5 percent this month as investors weighed rising global output from producers, such as the US, against production cuts by members of OPEC and its allies.
Harvey’s approach has depressed demand for crude with about 1 million barrels of daily refining capacity already shut.
Citigroup Inc estimates more than 2 million barrels of gasoline output might be affected by the storm.
West Texas Intermediate (WTI) for October delivery rose US$0.44 to settle at US$47.87 a barrel on the New York Mercantile Exchange. The contract is down 1.32 percent from last week’s US$48.51 per barrel.
Total volume traded was about 17 percent below the 100-day average.
Gasoline futures for September delivery climbed 0.2 percent to settle at US$1.67 per gallon, the highest level in more than three weeks and up 3.1 percent from last week’s US$1.62 per gallon.
Brent for October settlement gained US$0.37 to end the session at US$52.41 per barrel on the London-based ICE Futures Europe exchange. The contract rose 3 percent from last week’s US$50.84.
The global benchmark crude traded at a premium of $4.54 to WTI.
The Bloomberg Dollar Spot Index fell as much as 0.6 percent. A weaker greenback boosts the appeal of commodities as an investment.
Gulf Coast refineries in the path of the storm process almost 5 million barrels of oil per day. So far, refineries that have shut in the port city of Corpus Christi, Texas, include Flint Hills Resources LLC and Valero Energy Corp’s plants.
LyondellBasell Industries NV’s Houston plant is said to be operating at reduced rates.
In addition to refineries, Magellan Midstream Partners LP suspended operations at its Corpus Christi marine terminal and condensate splitter, while Genesis Energy LP is said to have shut its Cameron Highway Oil Pipeline System, known as CHOPS, in the Gulf of Mexico.
Phillips 66 said its Freeport, Texas, terminal is closed. Operators in the Gulf of Mexico have shut in about 377,200 barrels per day of crude production, according to the Bureau of Safety and Environmental Enforcement.
In the product market, investors have already taken positions and made profits, Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors LLC, said by telephone. “The play was a couple days ago and now it’s just kind of see what happens with the storm, especially if it lingers for three or four days and you get massive flooding.”
Oil market news:
‧ Hurricane Harvey poses a greater threat to the refining sector and ports than oil or gas production as there is little production in the areas expected to be hit, Goldman Sachs Group Inc said.
‧ The US administration is planning to unveil another round of sanctions on Friday designed to punish the government of Venezuela, according to two people familiar with the matter.
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