Published: Fri, September 01, 2017
Money | By Oscar Reynolds

USA senator urges Trump to tap fuel, oil reserves in Harvey's wake

USA senator urges Trump to tap fuel, oil reserves in Harvey's wake

The U.S. government is releasing half-a-million barrels of crude oil from the Strategic Petroleum Reserve to a Gulf Coast refinery as the region's refining industry works to recover from the devastation of Harvey.

The Nasdaq Composite logged its third straight day of gains, boosted by shares of chip makers.

Backwardation, when the front-month contract is more expensive than subsequent months, makes it uneconomical to store crude, resulting in the drawdown of inventories.

XAutoplay: On | OffThe Energy Information Administration will release data at 10:30 a.m. ET today on oil inventories and production from last week, before the catastrophic storm slammed into the south Texas and the Gulf Coast.

"We could see rising USA crude inventories in the next couple of weeks until demand from refineries recovers".

As the USA attempts to attract foreign cargoes, the spike in USGC gasoline and distillate prices could continue to feed into Europe and even impact Asian prices in September.

It would've been a much bigger issue a decade ago, when the Gulf accounted for almost 30% of the nation's oil production.

As of Wednesday evening, up to 4 million barrels per day, or 22 percent of total USA refining capacity, is offline following Harvey, S&P Global Platts reported.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at US$46.35 per barrel at 0155 GMT, down 9 cents from their last close.

Onshore production from shale formations such as the Eagle Ford, which S&P Global Platts said was producing about 1.34 million bpd of oil prior to the storm, is in the process of being restarted. The report also showed USA gasoline demand jumped to 9.846 million bpd last week as us refining utilization rates rose to 96.6 percent, the highest percentage since August of 2015.

US crude fell 25 cents to $46.19. Harvey was the strongest storm to hit the state in more than 50 years, forcing operators to shut refineries, pipelines and ports.

The closures rattled global fuel markets, and European and Asian traders diverted millions of barrels of gasoline and diesel to the Americas to help fill the gap. "It has to come from Asia even".

"I don't know how long it's going to take to get those (refineries) back on", Perry told reporters on Thursday aboard Air Force Two with Vice President Mike Pence.

This crude will now either have to be put in storage, or find other buyers.

Harvey is now moving back toward southeastern Texas and southwestern Louisiana, bringing six to 12 additional inches of rainfall with it, according to the National Weather Service.

The Motiva shutdown sent after-settlement gasoline prices up to 1.8180.

It remains to be seen whether this can be done at relatively short notice, but as things stand now, Harvey is providing a wealth of trading opportunities.

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