SINGAPORE”•Crude prices were mixed in Asian trade Monday as the closure of refineries in US oil heartland Texas due to monster storm Harvey was offset by sluggish global demand.
Harvey rolled over the US Gulf Coast and slammed into Texas on Friday as a huge Category 4 hurricane, sparking floods and mass evacuations, and prompting many oil refineries and ports to shut down.
US authorities said 22 percent of crude production in the Gulf of Mexico was halted, while global energy information provider S&P Global Platts said roughly 2.2 million barrels per day of refining capacity was also affected.
ExxonMobil said Sunday it had closed its massive Baytown refining complex”•the second-largest in the country.
In early afternoon trade in Asia, Brent crude for October was trading at $52.57 a barrel, up 16 cents or 0.31 percent.
US benchmark West Texas Intermediate (WTI) for delivery in October was at $47.69 a barrel, down 18 cents, or 0.38 percent. The contract had closed nearly one percent higher in New York on Friday as Harvey churned inland.
“Some offshore oil and gas operators evacuated platforms and rigs, although offshore production was picking up a bit Sunday, while onshore operators were shutting in what may amount to hundreds of wells in the Eagle Ford Shale in South Texas,” Platts said.
It said however that “refiners have not reported any damage so far.”
The Texas Gulf Coast is home to 4.944 million barrels per day of refining capacity, while the Louisiana Gulf Coast accounts for 3.696 million barrels per day, Platts said, citing data from the US Energy Information Administration.
But analysts said sluggish global demand remained a drag on the market.
“The bottom line is that for oil prices to increase significantly, global demand has to increase significantly,” Jude Clemente, principal at JTC Energy Research Associates, LLC, said in an article on Forbes.
“Much higher oil demand is the holy grail for oil bulls.”
Gasoline, however, surged to the highest in two years as flooding from Tropical Storm Harvey inundated refining centers along the Texas coast, shutting more than 10 percent of US fuel-making capacity.
Harvey, the strongest storm to hit the US since 2004, made landfall as a hurricane Friday, flooding cities and shutting plants able to process some 2.26 million barrels of oil a day. Pipelines were closed, potentially stranding some crude in West Texas and starving New York Harbor of gasoline.
“Gasoline prices are going to continue to rise this week as we expect another three days of rain in the Houston area,” Andy Lipow, president of consultant Lipow Oil Associates LLC in Houston, said by phone. “With pipeline operators beginning to shut down their crude oil and refined product infrastructure, I expect to see further curtailment of refinery operations. A spike in gasoline and diesel prices will drag up crude oil prices.”
Oil has traded this month in the tightest range since February as investors weigh rising global supply against output cuts by members of the Organization of Petroleum Exporting Countries and its allies. As Harvey led to widespread flooding, Royal Dutch Shell Plc shut its Deer Park plant, while Magellan Midstream Partners LP suspended its inbound and outbound refined products and crude pipeline transportation services in the Houston area.
