• 4 minutes China 2019 - Orwell was 35 years out
  • 7 minutes Wonders of US Shale: US Shale Benefits: The U.S. leads global petroleum and natural gas production with record growth in 2018
  • 11 minutes Trump will capitulate on the trade war
  • 14 minutes Glory to Hong Kong
  • 8 mins Yesterday Angela Merkel stopped Trump technology war on China – the moral of the story is do not eavesdrop on ladies with high ethical standards
  • 3 hours China's Blueprint For Global Power
  • 7 hours IMO 2020:
  • 9 hours World Stocks Drop And Futures Tread Water After China Reports Worst GDP Growth In 30 Years
  • 26 mins The Ultimate Heresy: Technology Can't Fix What's Broken
  • 3 hours Brexit agreement
  • 17 hours National Geographic Warns Billions Face Shortages Of Food And Clean Water Over Next 30 Years
  • 17 hours ABC of Brexit, economy wise, where to find sites, links to articles ?
  • 14 hours Why did Aramco Delay IPO again ? It's Not Always What It Seems.
  • 10 hours Deepwater GOM Project Claims Industry First
  • 17 hours Idiotic Environmental Predictions
  • 17 hours Joe Biden, his son Hunter Biden, Ukraine Oil & Gas exploration company Burisma, and 2020 U.S. election shenanigans
Alt Text

Oil Prices Jump On A Lone Piece Of Bullish News

Oil prices rose on Wednesday…

Alt Text

A Crisis Is Brewing For Offshore Oil

Times are hard for both…

Tom Kool

Tom Kool

Tom majored in International Business at Amsterdam’s Higher School of Economics, he is Oilprice.com's Head of Operations

More Info

Premium Content

Oil Prices Sag As Gasoline Prices Peak

The effects of Hurricane Harvey have sent the energy markets into chaos, with gasoline prices soaring and oil prices slipping. 

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)


(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

Friday, September 1, 2017

Hurricane Harvey is still far and away the major story of the week in the energy world, with a huge number of refineries still offline. Oil prices continue to sag, while gasoline prices soared this week.

Refinery outages persist. Some refineries in the Corpus Christi region are coming back online, but the larger ones in Houston and Port Arthur/Lake Charles are mostly offline. The Motiva facility in Port Arthur, the largest in the country, is still offline and could remain out of commission for two weeks, according to the latest reports. As of Friday, an estimated 3 mb/d of refining capacity is still offline, a slight improvement from earlier this week.

Colonial Pipeline outage interrupts gasoline flows to east coast. The Colonial Pipeline carries more than 2 million barrels per day of refined products – diesel, jet fuel and gasoline – from Texas and Louisiana up through much of the U.S. Southeast and Mid-Atlantic. The pipeline was forced to shut down because of problems sourcing enough product. The outage has led to a spike in gasoline futures, pushing them up to their highest level in years. "Typical Colonial Pipeline volumes are equivalent to Europe's gasoline exports, so these volumes will be difficult to replace and will require supplies from distant regions if the outage is prolonged," Wood Mackenzie analyst Alan Gelder said in a note. As of now, the pipeline is slated to come back online in a few days as refineries along the Gulf Coast trickle back online. But it will likely operate at reduced rates through next week at least. "The major refined product pipelines out of Houston are mostly shut because there is no gasoline and diesel to pump," said Andy Lipow, of Lipow Oil Associates. Related: An Energy Independent North America Needs NAFTA

TransCanada shuts down southern leg of Keystone pipeline. TransCanada (NYSE: TRP) announced the closure of the southern leg of its 600,000 bpd Keystone pipeline that runs from Cushing to refineries along the Texas Coast. The disruption could lead to a sharp increase in inventories at the Cushing storage facility. Discounts are deepening for Permian crude relative to WTI.

DOE taps SPR. The U.S. DOE authorized the release of 500,000 barrels of oil to help Phillips 66 (NYSE: PSX) to bring its Lake Charles refinery back online. The release is the first in five years.

Gasoline prices to rise. "Gas prices are going to go up because of the flooding," U.S. Sec. of Energy Rick Perry told reporters. He also warned that the state attorney general would be watching to make sure price gouging did not occur. Texas is seeing fuel shortages both in Houston and elsewhere in the state. Tom Kloza, global head of energy analysis at Oil Price Information Service, told CNBC that a worst-case scenario would be retail gasoline prices spiking by 40 to 60 cents per gallon, pushing averages up to $2.75 per gallon. Patrick DeHaan, senior petroleum analyst for GasBuddy, said the price increases and supply problems could last for a month or more.

Toxic releases in Texas. The storm has led to the spill or release of some 2 million pounds of hazardous chemicals, according to Business Insider, some of which are cancer causing agents such as carbon monoxide and benzene. Some companies had to intentionally burn and flare chemicals because they had no way of disposing them. The toxic threat was punctuated by the explosion at a chemical plant owned by French company Arkema (OTCMKTS: ARKAY).

U.S. offshore production still down. According to IHS Markit, Gulf of Mexico operators still have about 236,000 bpd offline, or about 13 percent of the total production from offshore producers in the Gulf. Fortunately, however, there are no reported damages to platforms.

Eagle Ford output cut in half, return delayed. The Eagle Ford shale in South Texas has suffered outages on the order of 500,000 bpd, although much of that could come back online when the port of Corpus Christi reopens in the coming days. But other analysts are more pessimistic. Raymond James & Associates estimates that more than half of the rigs in the Eagle Ford suspended operations, and it could take time for them to return to rain-soaked fields. “Given that much of oil and gas activity occurs in areas only accessible via dirt roads, the heavy rainfall usually makes the movement of trucks and supplies much more difficult,” Marshall Adkins of Raymond James wrote in a note. “The trucking and rail of sand, chemicals, and personnel to the well site will all take more time given the likely nasty condition of many Eagle Ford access roads.”

OPEC frustrated by low prices. Reuters reports that OPEC officials are bewildered by the lack of movement in crude prices even after the U.S. Gulf Coast was inundated by the worst rain event in the country’s history. “It seems no event will move the oil price up much,” an OPEC official told Reuters. “OPEC must be raging, they’re not getting any of this (gain),” Olivier Jakob of Petromatrix said.

Investment banks slash oil price forecasts again, Brent at $54 in 2018. An August survey of investment banks by the Wall Street Journal reveals ongoing pessimism regarding the trajectory of oil prices. The average prediction from the 14 investment banks puts Brent crude at $54 per barrel in 2018, down $1 per barrel from the same survey a month earlier. It marked the fourth consecutive month that major analysts cut their price forecasts. The big reason is the expectation that the OPEC deal expires next year and the group ramps up production.

Related: Kyrgyzstan Unveils Revamped Transnational Gas Pipeline

Tesla starts solar roof production. Tesla (NYSE: TSLA) announced the beginning of solar cell manufacturing at its Buffalo, NY factory, which will be used in its new solar roof arrays. The roof tiles will eventually be made at the same facility. Tesla hopes to ramp up to 2 GW of annual solar cell production over time, with an interim target of 1 GW by 2019.

U.S. government prepared to block Rosneft’s ability to take control of Citgo. Citgo, the U.S.-based subsidiary of Venezuela’s state-owned PDVSA, offered about half of the company as collateral to Rosneft last year in exchange for a $1.5 billion loan. With PDVSA looking dangerously close to a default, the U.S. government is concerned that Rosneft will take control of Citgo, which owns major refineries in the United States (some of which were disrupted during the Hurricane). According to the Wall Street Journal, the U.S. government is prepared to block the hypothetical takeover of Citgo by Rosneft.

By Tom Kool for Oilprice.com 

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment
  • Brandon on September 03 2017 said:
    We're currently producing less oil than what the world increasingly demands (which is even higher than the extra 1.5 Mbpd recently estimated for 2017). Oil prices are kept artificially lower with oil being traded on black market (from Kurdistan, Nigeria, etc.) and political control of information sources. Frequent and major discrepancies between the API and EIA reports should tell something about this.

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play