NEW YORK (DTN) -- New York Mercantile Exchange spot-month West Texas Intermediate crude oil futures rallied on Wednesday morning to a fresh high as the pace of refinery recovery from Hurricane Harvey quickened and concerns turned to Hurricane Irma that could hit southern Florida and the Gulf Coast by this weekend. RBOB continued lower as concerns about gasoline supply shortage eased while ULSD futures were little changed.
Irma with sustained 185 mph winds is now officially the most powerful Atlantic Ocean hurricane in recorded history. It is now headed toward Puerto Rico. Florida Gov. Rick Scott has declared a state of emergency and the state is monitoring fuel availability ahead of the Hurricane Irma. Evacuation has been ordered in some Florida counties.
It comes on the heels of Hurricane Harvey, which initially shut 31% of U.S. refining capacity and 21% of Gulf of Mexico oil production. But as floodwaters have receded in Texas, five refineries were in the process of restarting after being shut and one refinery has begun operations, according to a report Tuesday (9/5) by the Department of Energy. Six additional refineries in the Gulf Coast are operating at reduced rates.
Colonial Pipeline restarted its distillate Line 2 between Houston and Lake Charles on Sept. 4 and the same section of gasoline Line 1 was on track to restart on Sept. 5. It will begin shipping gasoline from the existing stocks in the Houston area. ExxonMobil Product Pipelines were also restarting, including Aldine to Houston Airport, which was expected to restart soon, the DOE report, said.
The Energy Department is now monitoring the approaching Hurricane Irma and is working with the Energy Information Administration to assess potential impact to the oil and gas sector. As of the week-ended Aug. 25, the EIA's Weekly Petroleum Status Report showed gasoline stocks in East Coast were near the top end of the 5-year range.
The American Petroleum Institute will issue its weekly oil data for the week-ended Sept. 1 this afternoon, while the EIA will release its data Thursday morning and a survey projects they will show stock draws for crude oil and refined products and refinery runs are expected to have declined by 9%.
Meantime, Russia's energy minister Alexander Novak today confirmed he and his Saudi Arabian counterpart Khalid al-Falih have discussed a potential extension to the ongoing production cut by the Organization of Petroleum Exporting Countries and non-OPEC through June 2018. The news provided support to Brent crude on the IntercontinentalExchange, which is trading at a $5 premium to WTI.
At last look, NYMEX October WTI crude futures climbed 45cts to $49.11 bbl, moving off a near one-month spot high of $49.34. ICE November Brent crude climbed 60cts to $53.98 bbl, off a better three-month spot high of $54.26, with Brent trading at a $4.87 bbl premium to WTI.
The NYMEX October RBOB futures were 3.69cts lower at $1.6622 gallon while October ULSD futures were little changed, edging up 0.85cts to $1.7565 gallon after inside trade.
George Orwel can be reached at email@example.com
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