Tuesday, 21 November, 2017

U.S. taps emergency petroleum reserve

WTI Crude Oil Daily October West Texas Intermediate Crude Oil
Juana Turner | 03 September, 2017, 08:16

As Harvey moved across the Southeast U.S. and weakened to a tropical depression, investors were also eyeing the potential for future disruption from a fresh storm brewing in the Atlantic Ocean.

And another blow came Thursday when Colonial Pipeline announced plans to shut down a key line that supplies almost 40 percent of the South's gasoline.

That marks an additional 3.5 million barrels on top of the 1 million barrels of oil already approved to be released as of Thursday. But because of the storm's effect on Gulf Coast refinery output, some of the gas that would normally come here will be routed elsewhere, squeezing supplies.

Others were seen running at higher rates to boost profitability by filling shortages.

"People are most cognizant of gasoline prices than any other expense", he said.

Washington, Sep 1 (IANS) The US Department of Energy (DOE) released 1 million barrels of crude oil from the country's Strategic Petroleum Reserve to avoid rising gasoline prices, as hurricane Harvey has shut down over 20 per cent of refinery capacity.

Phillips 66's Lake Charles, La., refinery has capacity to process 239,400 barrels a day, according to data compiled by Bloomberg.

As of Thursday afternoon, 10 refineries representing 16.6 percent of daily USA refining capacity were shut down, according to the Department of Energy.

Concerns over fuel shortages ahead of the U.S. Labor Day extended weekend were also mounting. Futures for October delivery fell 1.8% to $1.7479 a gallon on the New York Mercantile Exchange.

Nationwide, pump prices have surged - the average for a gallon of regular gasoline rose from about $2.35 a week ago to $2.45 now, AAA reported.

Motiva's massive Port Arthur refinery, the largest in the USA, shut down on Wednesday due to "increasing local flood conditions".

Harvey raked across the Texas Gulf coast, roiling global fuel markets as it knocked out about 4.4 million barrels of daily refining capacity, slightly more than Japan uses. The total shut-in is about 24 percent of US refining capacity, nearly equal to Japan's daily consumption.

The profit from turning a barrel of Dubai crude to fuel in Asia has soared to $9.78 a barrel, the most since June 2015, according to data compiled by Bloomberg.

Traders have scrambled to buy diesel from distant markets to avert supply shortages in the United States, Mexico and Brazil.

"Harvey is creating a dual benefit for Asian refiners", said Arun Kumar Sharma, finance director at Indian Oil.

The Asian refining margin on Thursday hit $10.41 a barrel, the highest since January 2016. Prices closed at the highest level in one week.

USA disruptions have hit wholesalers.

"The industry is working to stabilize the supply chain and working with our partners in the retail gasoline business to meet the demands they are experiencing", Staples said.

"It's not a significant problem at the present time, but it could turn into one", said William Fleischli, executive vice president of the Illinois Petroleum Marketers Association, which represents 400 fuel distributors.

But the impact won't last too much longer, he said.

Soaring U.S. gasoline prices mean it is now profitable to send the fuel from Singapore to the U.S. The premium of Gulf Coast gasoline to prices in Singapore, the regional trading hub, surged to $17.76 a barrel on August 30, the most since at least 2011, according to data compiled by Bloomberg.

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