US Gasoline Prices Climb as Refineries Gradually Restart

U.S. retail gasoline prices climbed Tuesday, even as oil refineries rumbled back into service after Hurricane Harvey disrupted operations along the Texas coast.

 

The average gasoline price was $2.648, 30.2 cents higher than a month ago, according to motorist advocacy group AAA. Gasoline prices normally retreat after the U.S. Labor Day holiday weekend.

 

Benchmark U.S. gasoline futures fell more than 3 percent, however, as refineries restarted.

 

U.S. oil refiners are estimated to have 3.67 million barrels a day of capacity shut during the week to Sept. 8, according to research company IIR.

 

"The recovery from Hurricane Harvey has accelerated over the weekend, with prolonged dry weather helping the decline in flood levels," Goldman Sachs analysts led by Damien Courvalin wrote Tuesday. Half of shut-in refinery capacity will likely be back online by Thursday, Sept. 7, they said.

 

Harvey killed more than 60 people, dumped more than 50 inches (127 cm) of rain and damaged 203,000 homes. Damages have been estimated as high as $180 billion. About a quarter of U.S. refining capacity was shuttered.

 

As of Monday, the U.S. Department of Energy had loaned up to 5.3 million barrels of oil from the nation's emergency reserve to four refining companies along the Gulf Coast.

 

Marathon Petroleum Corp. restarted a crude unit at its Texas City refinery, energy information service provider Genscape said. Petrobras began to restart its refinery in Pasadena, Texas, just outside of Houston.

 

Late Monday, Royal Dutch Shell Plc (RYDAF) prepared to restart units at its Deer Park, Texas refinery.

 

Pipelines returned to service. Enterprise Products Partners said it restarted lines Monday; ​Colonial Pipeline Co said it planned to restart the gasoline line between Houston and Hebert, Texas on Tuesday.

 

Most port operations across the U.S. Gulf Coast oil and gas hub resumed, although many still restricted vessel draft, according to the U.S. Coast Guard.

 

The number of U.S. Gulf oil and gas production platforms with evacuated personnel dropped to 14 from 30, according to the U.S. Bureau of Safety and Environmental Enforcement.

 

Oil companies that had shuttered Eagle Ford shale drilling operations began reporting potential earnings impacts. EOG Resources Inc said third-quarter ‍crude and condensate volumes would be lower than expected at 320,000 to 330,000 bpd.

 

Demand recovery after the storm may be muted by Hurricane Irma, which strengthened into a highly dangerous Category 5 storm and barreled toward the Caribbean and the southern United States. Irma, which threatened deadly winds, storm surges and flooding, threatens demand more than refining capacity, Goldman Sachs said.


(Reporting By Jessica Resnick-Ault; Editing by David Gregorio)