Crude climbs as Texas works to recover from Harvey

By Angelina Rascouet and Heesu Lee on 9/5/2017

LONDON and SEOUL (Bloomberg) -- Crude oil rose, and gasoline fell to the lowest in more than a week, as Gulf Coast refiners continued their recovery from the devastation of Hurricane Harvey.

Gasoline futures in New York have lost 3.7% since Friday. Valero Energy Corp. returned two Texas facilities to pre-storm rates, Citgo Petroleum Corp. restarted its Corpus Christi refinery and Exxon Mobil Corp. began shipping fuels through pipelines in the Houston area. The market is now watching another major hurricane, Irma, as it moves across the Atlantic toward the Caribbean.

Front-month gasoline futures surged more than 25% in August as Harvey forced shutdowns of key refineries, pipelines and ports that produce and dispatch much of the continent’s fuel. While the storm sent prices higher, the end of the summer driving season is poised to reduce consumption. Goldman Sachs Group Inc. sees half of shut U.S. refinery capacity back by Sept. 7.

Gasoline futures “are under pressure,” said Eugen Weinberg, head of commodities research at Commerzbank AG. “The refineries are getting started sooner than feared.”

October gasoline futures fell as low as $1.6579/gal on the New York Mercantile Exchange, 9 cents below Friday’s close, and were down 6.5 cents at $1.6834 as of 8:19 a.m. local time. There was no settlement Monday because of the U.S. Labor Day holiday.

West Texas Intermediate crude for October delivery rose 81 cents to $48.10/bbl in New York. Brent for November settlement gained 0.8% to $52.76/bbl on the London-based ICE Futures Europe exchange, and traded at a premium of $4.17 to November WTI.

Irma, now a Category 5 hurricane, is expected to cross the northern Leeward Islands late Tuesday and early Wednesday, according to an advisory from the U.S. National Hurricane Center. The NHC issued warnings for the U.S. and British Virgin Islands, Puerto Rico, Vieques and Culebra, while Florida declared a state of emergency to prepare for a potential strike by Irma.

Oil-market news. Saudi Arabia raised oil pricing for October sales to Asia, increasing its lighter grades for a second month, indicating the world’s largest crude exporter sees strengthening demand in its biggest market. Strong refining margins will last “several years,” Morgan Stanley said in a note. Russia and Saudi Arabia discussed the possibility of extending the OPEC-led agreement to cut oil production at a meeting in St. Petersburg, Russian Energy Minister Alexander Novak said. OPEC members’ compliance with pledged supply cuts hasn’t weakened, Iranian Oil Minister Bijan Namdar Zanganeh said in Tehran after meeting his Brazilian counterpart, Fernando Coelho Filho.

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