NEW YORK (DTN) -- New York Mercantile Exchange spot-month oil futures moved lower Friday morning as concerns about short-term supply begin to ease ahead of Labor Day holiday, with seasonal demand continuously slumping in September after peaking during the summer months.
Supply fears are easing after the Energy Department released oil from the Strategic Petroleum Reserve to refineries looking for crude in the Gulf Coast.
Harvey affected oil facilities are being assessed for damage, with some of the plants coming back online. The Port of Houston has reopened and the Galveston port has made plans to reopen today that would allow oil tankers to offload their cargoes.
Magellan on Thursday, Aug. 31, said limited storage and distribution services began at its Corpus Christi terminal after the restoration of electric power midweek. Pipelines originating in Texas are now comingling gasoline grades along their systems after fuel waivers were issued by the Environmental Protection Agency for 38 states and the District of Columbia.
"Corpus Christi, despite taking the brunt of Harvey's initial landfall, is currently faring the best," said IHS in a report on the storm's effects to the industry. "Flooding was far less severe in Corpus Christi and active recovery has been underway for a couple days."
The report added, "The region's four refineries, which collectively represent around 4.5% of U.S. distillation capacity, are all looking to begin restart operations this week."
Also, Houston-based analyst Kyle Cooper at ION Energy said traders are starting to recognize there is still nearly 230 million barrels (bbl) of gasoline in storage despite the current short-term supply concern.
The storm disrupted over 21% Gulf of Mexico oil production when it made landfall along the Texas coast a week ago, but some oil platforms have now been restarted. As of Thursday, Aug. 31, 13.5% of offshore production remains shut-in, according to the Bureau of Safety and Environmental Enforcement.
This afternoon, oil services firm Baker Hughes, Inc. will release its weekly report on the number of rigs operating in the United States, although the data is likely to be unheeded by the market given the impact of Hurricane Harvey.
At last look, NYMEX October RBOB futures contract tumbled 6.26 cents to $1.7166 gallon. On Thursday, the September RBOB contract expired after spiking 28% this week to a 26-month spot high of $2.1705 before expiring at $2.1399 gallon. The October ULSD contract was 2.82 cents lower at $1.7137 gallon, with the September contract expiring Thursday at $1.7575 gallon.
The NYMEX October West Texas Intermediate crude contract declined 50 cents to $46.73 bbl. ICE November Brent crude eased 50 cents to $52.01 bbl, with the October contract having expired Thursday.
ICE Brent futures premium over NYMEX WTI futures at $5.63 bbl eased from a $5.71 two-year high posted earlier this morning.
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