Oil prices continued to slide Tuesday as Tropical Storm Harvey continued to bear down on the Texas Gulf Coast and looked set to threaten more refineries.
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West Texas Intermediate futures were trading down 40 cents, or 0.86%, at $46.17 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, was down by 28 cents, or 0.54%, at $51.61 a barrel on ICE Futurse Europe.
The flooding caused by Tropical Storm Harvey sent U.S. crude down 2.7% to a five-week low Monday, as investors worried that disruptions to refineries would weigh on demand for crude oil.
Michael Tran, a commodity strategist at RBC Capital, said Harvey's impact is bearish for crude from a demand perspective.
Refiners in Corpus Christi that shut down ahead of the storm have said they are looking to restart, but more than 2 million barrels a day of refining capacity remains offline. It isn't yet clear whether plants in the Houston area have sustained heavy damage or if they will be able to ramp up relatively quickly once the storm passes.
"Everybody is waiting to see how long the refineries in Houston are going to be down -- whether they were significantly damaged or will restart come the end of the week," said Gene McGillian, research manager for Tradition Energy. "There isn't any known information about what's occurred yet."
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On Tuesday, the storm appeared to be heading toward Louisiana, which could mean that refineries in Port Arthur, Texas, and Lake Charles, La., will be inundated with water and would have to shut down or curtail processing rates. That would depress demand for crude even further -- Port Arthur is where the largest U.S. refinery is located.
The fears of fuel shortages helped pull gasoline futures higher again Tuesday, following their biggest one-day dollar gain in more than three months Monday. Gasoline futures rose 3.27 cents, or 1.91%, to $1.7450 a gallon. Diesel futures rose 1.48 cents, or 0.91%, to $1.6500 a gallon.
The storm has hobbled energy producers in south Texas' Eagle Ford shale, with companies like Chesapeake Energy saying they can't restart work until there refineries are up and running. But the storm has also made it harder for the refineries that are operating to get enough crude, said analysts at PIRA Energy Group, a unit of S&P Global Platts.
"Crude oil supply into Houston-area refineries is becoming constrained, causing some refineries to curtail runs due to sourcing issues," said Jenny Delaney, senior oil analyst at PIRA.
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(END) Dow Jones Newswires
August 29, 2017 11:02 ET (15:02 GMT)