Tag Archives: gasoline futures

Oil drops on surprise U.S. gasoline stocks build; crude stocks also up

FILE PHOTO: An oil pump is seen operating in the Permian Basin near Midland, Texas, U.S. on May 3, 2017. Picture taken May 3, 2017. REUTERS/Ernest Scheyder/File Photo

By Ayenat Mersie

NEW YORK (Reuters) – Oil prices fell more than 1 percent on Wednesday and gasoline futures tumbled, after the U.S. government said crude inventories rose more than expected while gasoline stocks posted a big build instead of the draw that was forecast.

U.S. crude inventories rose by 3 million barrels for the week ending Feb. 23, compared with analyst expectations for a build of 2.1 million barrels.

Gasoline inventories rose by 2.5 million barrels, compared to analyst expectations for a 190,000-barrel drawdown. Gasoline futures fell sharply, leading the rest of the energy complex lower.

“The report was bearish, primarily due to the fairly large crude oil and gasoline inventory builds,” said John Kilduff, partner at energy hedge fund Again Capital LLC in New York.

U.S. West Texas Intermediate crude dropped 75 cents at $62.26 a barrel, a 1.2 percent decline, as of 10:55 a.m. EST (1555 GMT). Brent crude futures for the most active May contract were down 84 cents at $65.68 a barrel.

Gasoline futures lost 2.2 percent to $1.7636 a gallon. The rise in inventories came even as refineries boosted activity in the most recent week.

“In spite of refiners undergoing maintenance, they continue to process more crude compared to previous years adding to gasoline and diesel supply,” said Andrew Lipow, president at Lipow Oil Associates in Houston.

Soaring U.S. production kept a lid on oil prices this year, even though the Organization of the Petroleum Exporting Countries and Russia have reduced output.

A Reuters survey on Wednesday showed OPEC maintained its supply cuts in February, dropping output to 32.28 million bpd, lowest since April of last year.

“Climbing U.S. production continues to weigh on the market as traders fear that the OPEC output cuts will be nullified by the rising U.S. output,” said William O’Loughlin, investment analyst at Australia’s Rivkin Securities.

U.S. crude production has risen by a fifth since mid-2016 to more than 10 million barrels per day. Wednesday’s release showed weekly production rose again to 10.3 million bpd. More reliable monthly figures are due later in the day, and analysts expect that report to show another large upward revision.

Prices were pressured earlier after three of the world’s top consumers of crude – China, India and Japan – reported a slowdown in monthly factory activity.

The U.S. dollar hit a one-month high Wednesday, putting additional pressure on crude. A stronger dollar makes oil more expensive for holders of other currencies.

(Additional reporting by Scott DiSavino in NEW YORK, Amanda Cooper in LONDON, Aaron Sheldrick in TOKYO and Henning Gloystein in SINGAPORE; Editing by Dale Hudson and David Gregorio)

Oil markets roiled as Harvey hits U.S. petroleum industry

An oil tank damaged by Hurricane Harvey is seen near Seadrift, Texas, August 26, 2017

By Ahmad Ghaddar

LONDON (Reuters) – Oil markets were roiled on Monday after Tropical Storm Harvey wreaked havoc along the U.S. Gulf Coast over the weekend, crippling Houston and its port, and knocking out several refineries as well as some crude production.

U.S. gasoline prices hit two-year highs as massive floods caused by the storm forced refineries in the area to close. In turn, U.S. crude futures fell as the refinery shutdowns could reduce demand for American crude.

Brent futures steadied as pipeline blockades in Libya slashed the OPEC state’s output by nearly 400,000 barrels per day .

Harvey is the most powerful hurricane to hit Texas in more than 50 years, killing at least two people, causing large-scale flooding, and forcing the closure of Houston port as well as several refineries.

The U.S. National Hurricane Center said Harvey was moving away from the coast but was expected to linger close to the shore through Tuesday. It said floods would spread from Texas eastward to Louisiana.

Texas is home to 5.6 million bpd of refining capacity, and Louisiana has 3.3 million bpd. Over 2 million bpd of refining capacity was estimated to be offline as a result of the storm.

Spot prices for U.S. gasoline futures surged 7 percent to a peak of $1.7799 per gallon, the highest level since late July 2015, before easing to $1.7341 by 1341 GMT.

U.S. traders were seeking oil product cargoes from North Asia, several refining and shipping sources told Reuters, with transatlantic exports of motor fuel out of Europe expected to surge.

“Global refining margins are going to stay very strong,” said Olivier Jakob, managing director of Petromatrix.

“If (U.S.) refineries shut down for more than a week, Asia will need to run at a higher level, because there’s no spare capacity in Europe.”

About 22 percent, or 379,000 bpd, of Gulf production was idled due to the storm as of Sunday afternoon, the U.S. Bureau of Safety and Environmental Enforcement said.

There might also be around 300,000 bpd of onshore U.S. production shut in, trading sources said.

Brent crude futures were up 2 cents at $52.43 per barrel. U.S. West Texas Intermediate  crude futures  were down 50 cents at $47.37.

The price moves pushed the WTI discount versus Brent to as much as $5.24 per barrel, the widest in two years.

 

 

(Additional reporting by Henning Gloystein in Singapore; Editing by Dale Hudson and Edmund Blair)

 

Harvey throws a wrench into U.S. energy engine

Interstate highway 45 is submerged from the effects of Hurricane Harvey seen during widespread flooding in Houston, Texas, U.S. August 27, 2017.

By Ernest Scheyder and Erwin Seba

HOUSTON (Reuters) – A hurricane in the heart of the U.S. energy industry is set to curtail near-record U.S. oil production for several weeks, with the impact expected to reverberate throughout the country and across international energy markets.

Harvey hit the Texas shore as a fierce Category 4 hurricane, causing massive flooding that has knocked out 11 percent of U.S. refining capacity, a quarter of oil production from the U.S. Gulf of Mexico, and closed ports all along the Texas coast.

Gasoline futures jumped as much as 7 percent to their highest level in more than two years in early Monday trading in Asia as traders took stock of the storm’s impact.

The outages will limit the availability of U.S. crude, gasoline and other refined products for global consumers and further push up prices, analysts said.

Damage assessments could take days to weeks to complete, and the storm continues to drop unprecedented levels of rain as it lingers west of Houston, home to oil, gas, pipeline and chemical plants. And restarts are dangerous periods, as fires and explosions can occur.

So far, the federal government has not announced if it will release barrels of oil or refined products from the nation’s Strategic Petroleum Reserve (SPR), which holds nearly 680 million barrels of oil.

The SPR was established in the 1970s to prevent supply shocks in the wake of an embargo imposed by several members of the Organization of the Petroleum Exporting Countries (OPEC).

“This is not like anything we have ever seen before,” said Bruce Jefferis, chief executive of Aon Energy, a risk consulting practice. It is too soon to gauge the full extent of Harvey’s damage to the region’s energy infrastructure, he said.

More than 30 inches (76 cm) fell in the Houston area in 48 hours and a lot more rain is forecast, according to the National Weather Service.

The storm was felt from coastal ports to inland oil and gas wells. Oil producers in the Eagle Ford shale region of south Texas have halted some operations.

At least four marine terminals in the Corpus Christi area, an export hub for energy deliveries to Latin America and Asia, remained closed due to the storm.

“We just simply don’t know yet the damage all this rain will have on Houston’s energy infrastructure,” said Andrew Lipow, president of energy consultancy Lipow Oil Associates LLC.

Texas refineries could be offline for up to a month if their storm-drainage pumps become submerged, he said.

As the storm churned towards Texas on Friday, U.S. gasoline futures rose to their highest level in three years for this time of year. Those gains came even before several large Houston area refiners, including Exxon Mobil Corp, halted some operations.

Exxon closed the second largest U.S. refinery, its 560,500 barrel-per-day (bpd) refinery in Baytown, Texas, complex because of flooding. Royal Dutch Shell  also halted operations at its 325,700-bpd Deer Park, Texas, refinery. The refinery may be shut for the week, it said.

Flooding on highways between Houston and Texas City nearer to the coast led Marathon Petroleum Corp to cut back gasoline production at the company’s 459,000-bpd Galveston Bay Refinery in Texas City, said sources familiar with plant operations.

Marathon Petroleum  employees were unable to drive to work and conditions at the plant forced the company to reduce gasoline output, said industry sources. Marathon spokesman Jamal Kheiry declined to discuss plant operations.

Not every plant in the region was hit. Operations were stable at the largest U.S. crude refinery, Motiva Enterprises’ 603,000-bpd Port Arthur plant, the company said.

Motiva double-staffed the refinery’s crew ahead of the storm, as did Total SA  at the company’s 225,500-bpd Port Arthur refinery, said sources familiar with plant operations.

Coastal refineries in Texas account for one-quarter of the U.S. crude oil refining capacity. All of those refineries have been impacted by Harvey since Thursday when refineries in Corpus Christi, Texas, shut in production ahead of the storm’s landfall on Friday.

Colonial Pipeline, the largest mover of gasoline, diesel and other refined products in the United States, said its operations had not been affected by Harvey. Any disruptions to the conduit would send prices across the U.S. Southeast and Northeast soaring. Traders have been keeping a close eye on whether there will be an outage at the pipeline.

Citgo Petroleum Corp and Flint Hills Resources , two of the refiners that closed last week as the storm approached, did not provide updates about the status of their Corpus Christi refineries on Sunday.

 

(Reporting by Ernest Scheyder; Additional reporting by Devika Krishna Kumar in New York; Editing by Gary McWilliams and Sandra Maler)

 

U.S. gasoline futures spike on Colonial pipe explosion in Alabama

Flames shoot into the sky from a gas line explosion in western Shelby County, Alabama, U.S.,

Nov 1 (Reuters) – Colonial Pipeline Co said on Monday its two main gasoline and distillates pipelines remain shut after an explosion on the gasoline pipeline caused a fire in Shelby County, Alabama.

A contract crew working on the gasoline pipeline experienced an incident when the trackhoe it was using hit the line, gasoline was ignited and caused a fire, Colonial said in an
e-mailed statement.

The fire continues to burn and five individuals were transported to Birmingham-area hospitals for treatment, while one fatality was recorded at the scene, according to the company.

(Reporting by Apeksha Nair in Bengaluru; Editing by Christian
Schmollinger)