James HesterGasoline surged early today as storm damage continued to put refinery supplies under pressure.
US gasoline prices jumped by as much as 7%. In contrast, the storm-induced refinery shutdowns remained bearish for crude.
Shutdowns
Nymex September gasoline futures reached $2.0086 per gallon early today, a near 7% rise versus yesterday and around 20% higher than last week.
Tropical Storm Harvey is estimated to have slashed US refining capacity by around 20%, with most plants in the Houston area remaining closed.
There are also fears of further shutdowns as rains and flooding intensify in certain parts of Texas.
US motorists could even face petrol shortages in the days ahead as flooding threatens key pipelines.
Bearish factor
Harvey-related disruption is a bearish factor for the crude market, even as gasoline prices surge.
The reduction in refining capacity should see more crude going into storage just as the US driving season comes to an end.
Since the storm first reached Texas at the end of last week, Brent crude futures have slipped from around $52 to $51 per barrel.
However, this is despite generally bullish data on US inventories. Figures released yesterday from the US Energy Information Service showed stockpiles had fallen by 5.4 million barrels last week.
Near-term trend
With crude stockpiles likely to rise over the coming weeks, as refining capacity struggles to recover, traders were anticipating a continuation of the near-term trend for lower crude prices but more expensive petrol.
Nevertheless, some of the upside for gasoline prices should be limited by lower petrol demand as September gets underway and Americans return to work from their holidays.