U.S. gasoline pump prices climb even as refineries restart

Source: By Jessica Resnick-Ault, Reuters • Posted: Wednesday, September 6, 2017

NEW YORK (Reuters) – U.S. retail gasoline prices climbed on 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.

Pump prices stayed higher, although benchmark U.S. gasoline futures fell nearly 4 percent as refineries restarted. Futures traders worried that the approaching Hurricane Irma could disrupt demand while supply recovered as most refineries returned to service.

Research company IIR said an estimated 3.67 million barrels a day of U.S. oil refining capacity was shut during the week to Sept. 8.

“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. Half of shut-in refinery capacity should be back online by Thursday, they said.

Harvey killed more than 60 people, dumped over 50 inches (127 cm) of rain and damaged 203,000 homes. About a quarter of U.S. refining capacity was shuttered.

The Department of Energy had loaned more than 5 million barrels of oil from the U.S. emergency reserve to four Gulf Coast refining companies.

Refinery restarts have been gradual. Operational difficulties included a small fire that broke out Tuesday on a shut sulfur recovery unit at Citgo Petroleum Corp’s 157,500 barrel per day (bpd) Corpus Christi, Texas, refinery, said sources familiar with plant operations.

Motiva Enterprises could restart partial production at the largest U.S. oil refinery as early as this week, sources familiar with the plans said. The timeline for full production remained uncertain, they said.

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.

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 Gulf Coast oil and gas hub resumed, although many restricted vessel draft, the U.S. Coast Guard said.

The number of U.S. Gulf oil and gas production platforms with evacuated personnel dropped to 14 from 30, a government agency said.

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

Hurricane Irma strengthened into a dangerous Category 5 storm and barreled toward the Caribbean and the southern United States, threatening deadly winds, storm surges and flooding. Irma could pinch demand recovery more than refining capacity, Goldman Sachs said.

Still, Irma could further disrupt supplies in Florida already limited by pipeline problems from Harvey.

Reporting By Jessica Resnick-Ault; Editing by David Gregorio