Tag Archives: Gasoline prices

U.S. drivers to get hit by soaring pump prices over Memorial Day holiday

By Stephanie Kelly

NEW YORK (Reuters) – U.S. motorists will see the highest gasoline prices in seven years when they hit the roads this Memorial Day weekend, the traditional start of the summer driving season, as fuel demand surges alongside coronavirus vaccination rates.

Retail gasoline prices are at about $3.04 a gallon on average nationwide, the most expensive since 2014, data from the American Automobile Association showed.

And after a year of lockdowns to curb the coronavirus pandemic, tens of millions of American road-trippers are expected to be stung by those prices: More than 34 million Americans are expected to take to the highways between May 27 and May 31, AAA expects, an increase of 53% from last year but still down 10% from 2019.

“Ahead of Memorial Day, gas demand is expected to rise as more Americans take to the roads for trips that may have been delayed or avoided because of the pandemic,” said Devin Gladden, AAA spokesperson.

U.S. gasoline demand is running at about 9.48 million barrels per day, the highest since March 2020, when U.S. officials began widely restricting travel, Energy Information Administration data showed.

Pump prices had already gotten a boost earlier this month after a ransomware attack on Colonial Pipeline, the nation’s largest fuel pipeline, shut the system for days and stopped fuel supplies from moving across the United States.

Motorists fearing a longer outage raced to gas stations to fill up their tanks, emptying at one point more than 16,000 stations across states such as North Carolina, South Carolina and Georgia.

Around 6,000 gas stations were still without fuel this week, according to tracking firm GasBuddy.

“This is still due to the Colonial outage recovery, plus high demand, making it hard for stations to get back on top of things,” said GasBuddy’s Patrick De Haan.

(Reporting by Stephanie Kelly; Editing by Cynthia Osterman)

U.S. consumer prices post biggest gain in 8-1/2 years as economy reopens

By Lucia Mutikani

WASHINGTON (Reuters) -U.S. consumer prices rose by the most in more than 8-1/2 years in March as increased vaccinations and massive fiscal stimulus unleashed pent-up demand, kicking off what most economists expect will be a brief period of higher inflation.

The report from the Labor Department on Tuesday also showed a firming in underlying prices last month as the broader reopening of the economy bumps against bottlenecks in the supply chain, capacity constraints and higher commodity prices.

Federal Reserve Chair Jerome Powell and many economists view higher inflation as transitory, with supply chains expected to adapt and become more efficient. The supply constraints mostly reflect a shift in demand towards goods and away from services during the pandemic, now in its second year.

“Inflation is a process and not a one-time event,” said Chris Low, chief economist at FHN Financial in New York. “These bottlenecks are one offs. The Fed will not consider action until it views price levels changes as permanent rather than temporary, something it does not consider possible until the economy is at full employment.”

The consumer price index jumped 0.6% last month, the largest gain since August 2012, after rising 0.4% in February. A 9.1% surge in gasoline prices accounted for nearly half of the increase in the CPI. Gasoline prices rose 6.4% in February.

Food prices edged up 0.1%. The cost of food consumed at and away from home also rose 0.1%.

Economists polled by Reuters had forecast the CPI advancing 0.5%. In the 12 months through March, the CPI surged 2.6%. That was the largest gain since August 2018 and followed a 1.7% increase in February.

The jump mostly reflected the dropping of last spring’s weak readings from the calculation. Those so-called base effects are expected to push up annual inflation even higher in the coming months before subsiding later this year.

Stocks on Wall Street were mostly higher. The dollar slipped against a basket of currencies. U.S. Treasury prices rose slightly.

UNDERLYING INFLATION FIRMING

Excluding the volatile food and energy components, the CPI increased 0.3% after nudging up 0.1% in February. The largest gain in seven months in the so-called core CPI was driven by a rise in rents as well as hotel and motel accommodation prices, which rebounded 4.4% after falling 2.7% in February.

The cost of hospital services increased 0.6%. But prescription medication prices were unchanged leading to overall healthcare costs edging up 0.1%. Used cars and trucks prices increased a solid 0.5%, but the cost new cars was unchanged for a second straight month. Motor vehicle production has been hampered by a global shortage of semiconductors.

Consumers also paid more for motor vehicle insurance as well as recreation and household furnishings. But apparel prices fell as did costs related to education.

The core CPI increased 1.6% on a year-on-year basis after rising 1.3% in February. The Fed tracks the core personal consumption expenditures (PCE) price index for its 2% inflation target, a flexible average. The core PCE price index is at 1.5%.

The cost of services advanced 0.4% after rising 0.3% in February. The government reported last week that producer prices surged in March. With the CPI and PPI data in hand, economists at JPMorgan forecast the core PCE price index gained 0.4% in March after nudging up 0.1% in February. That would lift the year-on-year increase to 1.9% from 1.4% in February.

March’s strong inflation readings are in sync with several business surveys showing an acceleration in cost pressures.

Manufacturers are grappling with acute shortages of basic materials, rising commodities prices and difficulties in transporting finished goods.

Some economists argue the fractured supply chains, together with nearly $6 trillion in government relief since the COVID-19 pandemic barreled through the United States in March 2020 could fan inflation for a sustained period. The Fed has also slashed its benchmark overnight interest rate to near zero and is pumping money into the economy through monthly bond purchases.

These economists also point to the business surveys, which have indicated that customer inventories are at record lows and order books are full. A survey from the NFIB on Tuesday showed just over a third of small businesses planned raising prices in March, noting that “low inventories and solid sales will create more opportunities to raise prices.”

“This suggests companies have strong pricing power that could allow them to expand profit margins after several years of margin compression, which could keep inflation higher for longer,” said James Knightley, chief international economist at ING in New York.

But labor market slack could make it harder for inflation to continue spiraling higher. Employment remains 8.4 million below its peak in February 2020. The extremely accommodative fiscal and monetary policy are also unlikely to keep inflation uncomfortably high, if history is a good predictor.

“Neither rapid money growth and record federal budget deficits have had any correlation with inflation over the past 40 years,” said David Berson, chief economist at Nationwide in Columbus, Ohio. “Additionally, the factors that have acted to keep inflation in check in recent decades – stable inflation expectations, increased use of technology, production movements to low-cost areas – all remain in place.”

(Reporting by Lucia Mutikani, Editing by Andrea Ricci)

Virtual schooling dents retail sales, Trump economic message

By Ann Saphir

(Reuters) – Slower-than-expected sales at retailers in August suggest a speed bump is emerging in the U.S. economic recovery from coronavirus lockdowns, less than two months before the Nov. 3 presidential election.

Overall, retail sales have returned to their pre-crisis levels and then some, gaining 0.6% in August, the Commerce Department said on Wednesday. The rebound plays into U.S. President Donald Trump’s narrative of resurgent growth after a sharp pandemic downturn. Incumbent presidents are generally helped at the polls by a strong economy, and hurt by a weak one.

But last month’s rise was driven in part by an increase in gasoline prices, not typically a cause for consumer celebration. Meanwhile core retail sales, a closer measure of underlying spending trends, fell 0.1% last month. Both readings fell short of economists’ expectations.

Back-to-school shopping season, or the lack of it, was one cause. Many students actually could not head back to the classroom because of COVID-19 restrictions, and their curbed spending on supplies helped drive down core retail spending, said Regions Financial Corp economist Richard Moody. Meanwhile, a jump in sales at restaurants and bars drove most of the gain in overall retail sales.

The softening comes as nearly 30 million Americans are on some form of unemployment insurance. An extra $600 weekly that out-of-work-adults were getting in government aid expired at the end of July; it was replaced by a program that sent out $300 payments, but stopped taking new applicants on Sept. 10.

Lawmakers have so far failed to agree to any new aid package, and without more fiscal help, economists say the recovery will stall.

“The economy is weak: there are no two sides around that,” says Eric Winograd, senior economist at AllianceBernstein. Part of a voter’s calculus in picking a president may be, “Do you think additional stimulus is necessary, and if so what do you want that to look like?”

(Reporting by Ann Saphir; editing by Heather Timmons and Nick Zieminski)

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 hits highest since July 2015 as producers say market rebalancing

A gas station worker pumps gas into a car at a gas station of the state oil company PDVSA in Caracas, Venezuela August 29, 2017.

By Jessica Resnick-Ault

NEW YORK (Reuters) – Oil prices hit a more than two-year high on Monday after major producers said the global market was on its way toward re-balancing, while Turkey threatened to cut oil flows from Iraq’s Kurdistan region toward its ports.

The November Brent crude futures contract was up $1.51, or 2.5 percent, at $58.37 a barrel by 11:33 a.m. EDT, its highest since July, 2015.

U.S. West Texas Intermediate crude for November delivery rose $1.02, or 2 percent, to $51.68 a barrel, close to highs last seen in May.

“It’s all driven by the idea is that the production cut is starting to work and the rebalance is underway,” said Gene McGillian, director of market research at Tradition Energy in New York.

Even as both contracts rallied, concerns about U.S. production growth weighed on WTI, widening the spread between the two, he said.

The discount of the WTI to Brent futures widened to $6.61, the widest since August 2015.

Turkey has said it could cut off a pipeline that carries oil from northern Iraq to the global market, putting more pressure on the Kurdish autonomous region over its independence referendum.

The Iraqi government does not recognize the referendum and has called on foreign countries to stop importing Kurdish crude oil.

“If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market,” Commerzbank said in a note.

The Organization of the Petroleum Exporting Countries, Russia and several other producers have cut production by about 1.8 million barrels per day (bpd) since the start of 2017, helping to lift oil prices by about 15 percent in the past three months.

Kuwaiti Oil Minister Essam al-Marzouq, who chaired Friday’s meeting in Vienna of the Joint Ministerial Monitoring Committee, said output curbs were helping to cut global crude inventories to their five-year average, OPEC’s stated target.

Russia’s energy minister said no decision on extending output curbs beyond the end of March was expected before January, although other ministers suggested such a decision could be taken before the end of this year.

Iran expects to maintain overall crude and condensate exports at around 2.6 million bpd for the rest of 2017, a senior official from the country’s state oil company said.

The energy minister from the United Arab Emirates said the country’s compliance with OPEC’s supply cuts was 100 percent.

Nigeria is pumping below its agreed output cap, its oil minister said.

 

 

(Additional reporting by Osamu Tsukimori in Tokyo and Fanny Potkin in London; Editing by Marguerita Choy and Jane Merriman)

 

U.S. gasoline prices tumble as Harvey subsides

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/File Photo

By Ron Bousso

LONDON (Reuters) – Benchmark U.S. gasoline prices slumped on Monday to pre-Hurricane Harvey levels as oil refineries and pipelines in the U.S. Gulf Coast slowly resumed activity, easing supply concerns.

Brent crude oil futures were flat at $52.75 by 1340 GMT, paring earlier losses after a powerful North Korean nuclear test triggered a shift away from crude markets to assets perceived to be safer, such as gold.

U.S. West Texas Intermediate crude futures, however, were up 34 cents at $47.63 barrel as U.S. demand, hit by reduced refinery activity since Harvey made landfall on Aug. 25, recovered.

NYMEX gasoline futures were down 3.2 percent at $1.6916 a gallon, levels last seen on Aug. 25, the day Harvey struck, crippling production and causing widespread flooding.

Still, damage to the oil infrastructure in the Gulf Coast hub by Harvey appeared less extensive than some had feared.

Harvey has now been downgraded to a tropical storm.

A number of major refineries, which convert crude oil into refined products such as gasoline and jet fuel, as well as distribution pipelines, were gradually resuming operations on Monday.

Valero Energy’s 225,000 barrels per day (bpd) Texas City refinery was the only plant reported to be running at normal rates so far.

At the same time, about 5.5 percent of the U.S. Gulf of Mexico’s oil production, or 96,000 barrels of daily output, remained shut on Sunday, down from a peak of more than 400,000 bpd last week.

“The disruptions from Hurricane Harvey in the U.S. Gulf Coast are gradually clearing. In the broader scheme of things, it appears that so far the energy industry was spared major damages to assets and infrastructure,” analysts at Vienna-based JBC Energy said in a note.

“However, some Houston area refineries will likely remain offline for some time longer.”

Traders booked dozens of gasoline tankers over the past week from Asia and Europe to the United States and Latin America in order to plug supply shortages in the wake of the shutdowns.

European gasoline refining margins dropped by nearly a fifth on Monday.

And while the U.S. government tapped its strategic oil reserves for the first time in five years last week, the head of the International Energy Agency (IEA) said the global energy watchdog still sees no need for a coordinated international release of oil stocks after Harvey.

Texas Governor Greg Abbott estimated damage at $150 billion to $180 billion, calling it more costly than Hurricanes Katrina or Sandy, which hit New Orleans in 2005 and New York in 2012 respectively.

Traders were nervously watching developments in North Korea, where the military conducted its sixth and most powerful nuclear test over the weekend. Pyongyang said it had tested an advanced hydrogen bomb for a long-range missile, prompting the threat of a “massive” military response from the United States if it or its allies were threatened.

That put downward pressure on crude as traders moved money out of oil – seen as high-risk markets – into gold futures traditionally viewed as a safe haven for investors. Spot gold prices rose for a third day, gaining 0.9 percent on Monday.

Overall trading activity in the oil futures market was expected to be low on Monday due to the U.S. Labor Day public holiday.

 

(Additional reporting by Henning Gloystein in Singapore; Editing by Louise Heavens)

 

Texas edges closer to recovery after Harvey as key pipeline restarts

Samaritans help clear debris from the house of a neighbor which was left flooded from Tropical Storm Harvey in Houston, Texas, U.S. September 3, 2017.

By Catherine Ngai

HOUSTON (Reuters) – The U.S. Gulf Coast moves closer to recovery from Hurricane Harvey on Monday when the biggest American fuel system restarts a key segment shut down by devastating rains and officials weigh how to pay for billions of dollars in damage.

The move by Colonial Pipeline to resume transporting distillates such as diesel fuel comes as the Gulf region’s energy industry starts to come back online.

Flooding from Harvey drove up fuel prices by shutting down almost a quarter of U.S. refining capacity.

The storm came ashore on Aug. 25 as the most powerful hurricane to hit Texas in more than 50 years. It killed an estimated 50 people, displaced more than 1 million and damaged some 200,000 homes in a path of destruction stretching for more than 300 miles (480 km).

Colonial said it expected to reopen a Texas section of its network from Houston to Hebert, Texas, on Monday, which is the Labor Day holiday. The line would be ready to start moving gasoline on Tuesday, it said.

The pipelines’ reopening will restore links between refineries along the Gulf Coast, the U.S. petrochemical hub, to markets in the Northeast.

Another fuel system, Explorer Pipeline, said a link running from Texas to Oklahoma restarted on Sunday, with a second pipeline from Oklahoma into the Midwest expected to resume on Monday.

Retail fuel costs surged through the weekend amid fears of shortages, despite the restart of several key Gulf refineries that had been crippled by Harvey.

Treasury Secretary Steven Mnuchin challenged Congress on Sunday to raise the government’s debt limit in order to free up relief spending. Texas Governor Greg Abbott said the storm had caused up to $180 billion in damage.

President Donald Trump’s administration has asked Congress for an initial $7.85 billion for recovery efforts, a small fraction of what will eventually be needed.

Even that amount could be delayed unless Congress quickly increases the government’s debt ceiling, Mnuchin said. The United States is on track to hit its mandated borrowing limit by the end of the month unless Congress increases it.

Houston Mayor Sylvester Turner said the city expected most public services and businesses to be restored by Tuesday, the first day after the Labor Day holiday.

About 37,000 families were staying in 270 shelters in Texas, the highest number reported by the American Red Cross.

The city mandated the evacuation of thousands of people on the western side of Houston on Sunday to accommodate the release of water from reservoirs that otherwise might sustain damage. The storm stalled over Houston, the fourth-largest U.S. city, dumping more than 50 inches (1.3 m) on the region.

 

(Reporting by Catherine Ngai in HOUSTON and Ian Simpson in WASHINGTON; Editing by Paul Tait)

 

Thousands flee Texas towns flooded by Harvey; gas prices spike

Lorenzo Salina helps a neighbor to clean a house damaged by Tropical Storm Harvey in East Houston, Texas, U.S. September 1, 2017.

By Emily Flitter and Peter Henderson

ORANGE, Texas/HOUSTON (Reuters) – Rescuers searched flooded sections of southeastern Texas for people trapped by Hurricane Harvey’s deluge on Friday, and Houston’s mayor warned residents of the city’s west that their neighborhoods may remain underwater for two weeks.

The storm, one of the costliest to hit the United States, has displaced more than 1 million people, with up to 44 feared dead from flooding that paralyzed Houston, swelled river levels to record highs and knocked out the drinking water supply in Beaumont, Texas, a city of about 120,000 people.

Houston Mayor Sylvester Turner called for voluntary evacuations of flooded homes, which he said may remain waterlogged as the Army Corps of Engineers continues to release water into the Buffalo Bayou to prevent dam and levee failures.

About 80 miles (130 km) east of the city, the Neches River, which flows into Beaumont and nearby Port Arthur, was forecast to crest on Friday.

Rescue officials were still working to determine the scope of flooding caused by releases from Orange County dams, said Rodney Smith, deputy chief of the Cedar Hill, Texas, Fire Department.

“A lot of what gives us a snapshot of what’s on the ground are 911 (emergency) calls,” Smith said, adding that about 80 rescue crews were rotating through the county. “If the water starts to recede, we’ll start doing searches door-to-door, block-to-block to see if anyone is still in their homes.”

Tiana Kelly, 22, was waiting in a shelter in Orange, Texas, after being rescued from her flooded street by National Guard troops in a special high-water truck at 2 a.m. Friday.

“I was checking on my neighbor’s dogs and I saw their flashlights, so I flashed my flashlight and they came and got us,” Kelly said as she sat with her 11-month old son, Kalameet, in her arms. “They told us there was an eight-foot flash (flood) that was supposed to come.”

Chemical maker Arkema SA said a fire started on Thursday in a truck storing chemicals at a flooded plant 25 miles (40 km) east of Houston had burned itself out by Friday, but that more blasts were likely in eight other trucks storing the same chemicals in the coming days. Police were enforcing 1.5-mile (2.4-km) exclusion zone around the Crosby, Texas facility.

With three months remaining in the official Atlantic hurricane season, a new storm, Irma, had strengthened into a Category 3 storm on the five-step Saffir-Simpson scale, on Friday. It remained hundreds of miles from land but was forecast to possibly hit the U.S. territory of Puerto Rico, the Dominican Republic and neighboring Haiti by the middle of next week.

Harvey shut about a quarter of U.S. refinery capacity, much of which is clustered along the Gulf Coast, and caused gasoline prices to spike to a two-year high ahead of the long Labor Day holiday weekend.

Harvey roared ashore a week ago as a Category 4 storm and the most powerful hurricane to hit Texas in half a century. It dumped unprecedented amounts of rain and left devastation across more than 300 miles (480 km) of the state’s coast.

 

OIL RELEASED FROM FEDERAL SUPPLY

The national average for a gallon of regular gasoline has risen 17 cents since the storm hit, hitting $2.519 as of Friday morning, the highest since August 2015, according to motorists group AAA.

Supply concerns prompted the U.S. Energy Department to authorize the release of up to 4.5 million barrels of oil from the Strategic Petroleum Reserve.

Several East Coast refineries have run out of gasoline, raising fears that travelers will face fuel shortages during the three-day holiday.

In major Texas cities including Dallas, there were long lines at gas stations.

The storm came on the 12th anniversary of Hurricane Katrina, which killed about 1,800 around New Orleans. Then-U.S. President George W. Bush’s administration was roundly criticized for its botched early response to the storm.

Signaling that he did not want to be seen as repeating those mistakes, President Donald Trump plans a second visit to the region on Saturday.

“The people of Texas and Louisiana were hit very hard by a historic flood and their response taught us all a lesson, a very, very powerful lesson,” Trump said after meeting with charity organizations in the Oval Office. “There was no outbreak in crime. There was an outbreak of compassion only … and it really inspired us as a nation.”

U.S. first lady Melania Trump, Vice President Mike Pence and U.S. President Donald Trump receive an update on Hurricane Harvey recovery efforts at the White House in Washington, U.S., September 1, 2017.

U.S. first lady Melania Trump, Vice President Mike Pence and U.S. President Donald Trump receive an update on Hurricane Harvey recovery efforts at the White House in Washington, U.S., September 1, 2017. REUTERS/Kevin Lamarque

Lawmakers will replenish a federal disaster relief fund to keep aid flowing, but full assistance will come from Congress in installments, U.S. House of Representatives Speaker Paul Ryan said.

“The cash drain is fast. And so we’re going to have to do some quick responses,” Ryan said in an interview with radio station WCLO in his hometown Janesville, Wisconsin.

Moody’s Analytics estimated the economic cost from Harvey for southeastern Texas at $51 billion to $75 billion.

 

 

 

(Additional reporting by Richard Valdmanis, Marianna Parraga, Ernest Scheyder, Ruthy Munoz, Peter Henderson and Andy Sullivan in Houston, David Gaffen in New York, Jon Herskovitz in Austin, Texas, and Brendan O’Brien in Milwaukee; Writing by Scott Malone Jon Herskovitz; Editing by Bill Trott and Jonathan Oatis)

 

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)

 

Houston crippled by catastrophic flooding with more rain on the way

Flooded downtown is seen from a high rise along Buffalo Bayou after Hurricane Harvey inundated the Texas Gulf coast with rain causing widespread flooding, in Houston, Texas, U.S. August 27, 2017 in this picture obtained from social media.

By Gary McWilliams and Ruthy Munoz

HOUSTON (Reuters) – Houston is facing worsening historic flooding in the coming days as Tropical Storm Harvey dumps more rain on the city, swelling rivers to record levels and forcing federal engineers on Monday to release water from area reservoirs in hopes of controlling the rushing currents.

Harvey, the most powerful hurricane to strike Texas in more than 50 years, first hit land late on Friday and has killed at least two people. It has since lingered around Texas’ Gulf Coast, where it is forecast to remain for several more days, drenching parts of the region with a year’s worth of rain in the span of a week.

Schools, airports and office buildings in the nation’s fourth largest city were ordered shut on Monday as scores of roads turned into rivers and chest-high water filled neighborhoods in the low-lying city that is home to about 2.3 million people. The area’s vital petrochemcial industry also was crippled.

Torrential rain also hit areas more than 150 miles (240 km) away, swelling rivers upstream and causing a surge that was heading toward the Houston area, where numerous rivers and streams already have been breached.

More flooding is expected as water levels continue to rise, putting more residents at risk. More than 30,000 people are expected to be placed temporarily in shelters, FEMA Administrator Brock Long said at a news conference on Monday. The National Weather Service said the worst of floods are expected Wednesday and Thursday, although there is still uncertainty over the storm’s path.

 

RESERVOIR RELEASES

The U.S. Army Corps of Engineers said Monday that it was releasing water from two nearby reservoirs into Buffalo Bayou, the primary body of water running through Houston.

“If we don’t begin releasing now, the volume of uncontrolled water around the dams will be higher and have a greater impact on the surrounding communities,” said Colonel Lars Zetterstrom, Galveston district commander of the Corps.

The Harris County Flood Control District said it expected the release to start flooding homes around the Addicks and Barker reservoirs on Monday morning.

Authorities ordered more than 50,000 people to leave parts of Fort Bend County, about 35 miles (55 km) southwest of Houston, as the Brazos River was set to crest at a record high of 59 feet (18 m) this week, 14 feet above its flood stage.

Brazos County Judge Robert Hebert told reporters the forecast crest represented a high not seen in at least 800 years.

“What we’re seeing is the most devastating flood event in Houston’s recorded history,” said Steve Bowen, chief meteorologist at reinsurance company Aon Benfield.

Harvey is expected to produce an additional 15 to 25 inches (38 to 63 cm) of rain through Friday in the upper Texas coast and into southwestern Louisiana, the National Hurricane Center said.

By the end of the week in some Texas coastal areas the total precipitation could reach 50 inches (127 cm), which is the average rainfall for an entire year, forecasters said. Nearly 24 inches fell in 24 hours in Baytown, a city with major refineries about 30 miles east of Houston, the weather service said early on Monday.

Dallas, 240 miles (386 km) north of Houston, will set up a “mega shelter” at its convention center to house 5,000 evacuees, the city said in a statement.

 

TRUMP VISIT

U.S. President Donald Trump plans to go to Texas on Tuesday to survey the storm damage, a White House spokeswoman said on Sunday. On Monday he approved an emergency declaration for Louisiana.

Trump, facing the first big U.S. natural disaster since he took office in January, had signed a disaster proclamation for Texas on Friday, triggering federal relief efforts. Texas Governor Greg Abbott said on Sunday he planned to add 1,000 more National Guard personnel to the flood battle.

Almost half of the U.S. refining capacity is in the Gulf region. Shutdowns extended across the coast, including Exxon Mobil’s Baytown refinery. More than 2.3 million barrels of capacity were offline as of Monday morning, representing 13 percent of daily U.S. production.

Gasoline futures rose more than 4 percent to two-year highs on Monday morning. The outages will limit the availability of U.S. gasoline and other refined products for global consumers and push prices higher, analysts said.

The center of Harvey was 90 miles (148 km) southwest of Houston on Monday morning and forecast to arc slowly toward the city through Wednesday.

Thousands of people were rescued on Sunday by Harris County Sheriff’s Office, U.S. Coast Guard and Houston police as residents brought boats to staging centers and helicopters were deployed to save others stranded.

Federal authorities predicted it would take years to repair the damage from Harvey. The expected rain conjured memories of Tropical Storm Allison, which lingered for days over South Texas in 2001, flooding 70,000 homes and causing $9 billion in damage.

Damages are not likely to be as extensive as Katrina in 2005, which killed 1,800 people in and around New Orleans, or Sandy, which hit New York in 2012, said a spokeswoman for Hannover Re, one of the world’s largest reinsurers. Those caused $80 billion and $36 billion in insured losses, respectively.

All Houston port facilities will be closed on Monday because of the weather threat, a port spokeswoman said.

More than 247,000 customers in the Houston area were without power on Monday morning, utilities CenterPoint Energy, AEP Texas and TNMP said. CenterPoint warned, though, it could not update its figures due to limited access caused by flooding.

Jose Rengel, 47, a construction worker who lives in Galveston, helped rescue efforts in Dickinson, southeast of Houston, where he saw water cresting the tops of cars.

“I am blessed that not much has happened to me but these people lost everything,” he said.

“And it keeps raining. The water has nowhere to go.”

 

(Additional reporting by Brian Thevenot in Rockport, Kevin Drawbaugh, Valerie Volcovici and Jeff Mason in Washington, DC, Chris Michaud and Dion Rabouin in New York, Erwin Seba, Marianna Parraga, Nick Oxford and Ernest Scheyder in Houston; Writing by Jon Herskovitz and David Gaffen; Editing by Lisa Von Ahn and Bill Trott)