Sun, Sep 03, 2017 - Page 14 News List

Gasoline slips as refiners resume operations in US

Bloomberg

Motor fuel prices declined as traders assessed the supply implications of refinery restarts following hurricane-induced shutdowns in the US.

Gasoline futures tumbled 1.8 percent in New York following last month’s 25 percent rise as Gulf Coast refiners, including Valero Energy Corp and Citgo Petroleum Corp, fired up shuttered equipment.

The US Environmental Protection Agency eased anti-pollution rules for 38 states and Washington to allow more varieties of gasoline to flow between markets.

Meanwhile, the US Department of Energy approved the release of 4.5 million barrels of government-owned crude from the Strategic Petroleum Reserve (SPR) to help keep refineries running.

“The government is actually reacting positively trying to address and do what they can,” John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund, said by telephone. “There are some signs of life in several of the refineries already” and the tapping of the reserve “is also helping to ease anxieties over the storm.”

The US crude benchmark, West Texas Intermediate (WTI), ended the session at the highest level in a week.

Harvey slashed refining capacity as it moved through Texas, forcing shutdowns of key refineries from Corpus Christi to Houston to Port Arthur, including the largest US fuel-making plant.

At the same time, refiners, such as Marathon Petroleum Corp, are trying to resume operations at their plants.

Gasoline for October delivery on Friday fell 1.8 percent to settle at US$1.7479 per gallon on the New York Mercantile Exchange, but was up 4.8 percent for the week.

WTI for October delivery rose US$0.06 to end the session at US$47.29 per barrel. The contract is down 1.2 from last week’s US$47.87 per barrel.

Crude futures fell 5.9 percent last month, the biggest monthly decline since March.

Brent for November settlement fell US$0.11 to settle at US$52.75 on the London-based ICE Futures Europe exchange, up 0.6 percent for the week. The global benchmark traded at a premium of US$4.76 to November WTI.

The storm also rolled into Louisiana, disrupting crude deliveries and prompting Phillips 66’s request for two shipments of SPR crude for its refinery in Lake Charles.

Shipments of low-sulfur crude were also approved for Valero and Marathon. The swap agreements with the government require the companies to replace the oil once supplies are flowing again.

Meanwhile, the Port of Corpus Christi in Texas lifted some restrictions to allow larger ships to enter and Magellan Midstream Partners LP resumed limited services on a segment of its Houston crude distribution system.

“There’s going to be a lot of noise around Hurricane Harvey over the next few weeks, given the fact that it was obviously very disruptive,” Joseph Bozoyan, a portfolio manager at Manulife Asset Management LLC in Boston, said by telephone. However, “it sounds like things are getting back on track in terms of refineries coming back online and also some of the pipelines as well.”

Oil market news:

‧ Crude oil production from OPEC members decreased 140,000 barrels per day last month, according to the latest Bloomberg survey.

‧ The US oil rig count was unchanged at 759 rigs, according to Baker Hughes data released on Friday.

‧ Iraq said it has gone deeper than its pledged oil output cut and is pumping 4.32 million barrels per day, below the 4.35 million target agreed last year, Iraqi Oil Minister Jabbar al-Luaibi said on Friday.

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