NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures traded mixed Monday morning with September RBOB futures near a better-than-two-year high amid concern about a looming supply shortage after a number of refineries and pipelines along the Texas coast remained shut due to Hurricane Harvey.
In addition to the logistical problems and other disruptions in the Texas coast, the deadly storm has caused flooding that has forced thousands of Houston residents out of their homes, with a number of oil traders in the city affected, a spot market trade source said.
There wasn't much trading activity reported early session, although some traders were reported squaring their positions ahead of Thursday's (Aug. 31) expiration of the NYMEX September contracts for RBOB and ULSD futures and the October Brent contract on the IntercontinentalExchange.
"No one is going to the office today given what's going on in the Gulf," said the source. "They are working out of their homes, and even that is not guaranteed because of power outages."
Hurricane Harvey left a trail of devastation along the Texas Gulf Coast after making landfall Friday, Aug. 25, as a Category 4 storm. So far, it has caused some deaths and severe flooding and power outages in Texas, and has forced several oil refineries in southern Texas as well as some pipelines and terminals to close.
The power outages in the Houston area have prompted concern over the availability of gasoline and diesel fuel supply. Texas and federal emergency officials warned it could be weeks before the situation is back to normal.
The shutdown of oil refineries from Corpus Christi to Houston has reduced demand for crude, pressing West Texas Intermediate futures lower. In addition, the storm crippled Houston and its port, and knocked out offshore and some onshore crude production.
The Bureau of Safety and Environmental Enforcement said based a total of 105 production platforms, 14.25% of the 737 manned platforms in the Gulf of Mexico have been evacuated as of this morning.
This is one of the most powerful storms to hit Texas in decades, said federal emergency officials, adding the Houston area could see up to 50 inches of rain.
The worry now is that the catastrophic flooding is causing logistical problems that could last several days or weeks and keep product supply tight.
Among the refineries shut hear Houston are Exxon Mobil Corp.'s 560,000 bpd Baytown refinery, Royal Dutch Shell PLC's 285,000 bpd Deer Park refinery, and Valero Energy Corp.'s two facilities in Corpus Christi, where the storm made landfall on Friday, Aug. 25.
In early trade, the September RBOB futures climbed 6.35 cents to $1.7301 gallon, off a two-year high of $1.7799, with the October contract up 5.35 cents to $1.5943 gallon.
September ULSD futures contract gained 3.16 cents to $1.6539 gallon, off a three-week high of $1.6681, and the October contract was up 2.72 cents at $1.6511 gallon.
NYMEX October WTI crude contract declined 41 cents to a $47.46 bbl. The October Brent crude contract on the ICE platform was little changed at $52.42 bbl, with the November contract also near flat at $51.99 bbl.
George Orwel can be reached at email@example.com
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