Crude oil prices ticked higher Tuesday morning, while gasoline prices slid, in response to some U.S. refineries restarting operations after being forced to shut down last week in the wake of Hurricane Harvey.
Brent crude, the global benchmark, was up 0.25%, at $52.47 a barrel in London midmorning trading. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 1.04%, at $47.78 a barrel.
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As refineries come back online it is boosting demand for U.S. oil and "supporting crude prices," said Ehsan Ul-Haq, director at consultancy Resource Economist Ltd.
"Gradually, refined product prices will come down to where they were before the hurricane," he said.
Gasoline prices had surged to a two-year high last week after Harvey--downgraded to a tropical depression--knocked out more than 20% of U.S. refining capacity, stoking fears of a nationwide fuel shortage.
Colonial Pipeline Co., which operates a vital pipeline that pumps gasoline from Texas to the East Coast, said it expects to restart shipments today.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract--was down 1.76%, at $1.75 a gallon. ICE gasoil changed hands at $504.00 a metric ton, up 0.15% from the previous settlement.
Experts, nonetheless, expect some refining capacity to remain offline in the coming weeks, while U.S. exports from the Gulf Coast should take longer to jump-start.
This has meant "unusual trade routes are opening up" to both fill the gap left by the Gulf Coast refined product producers, including the potential shipping of jet fuel from northeast Asia to the U.S. East Coast, according to analysts at oil consultancy JBC Energy.
Meanwhile, traders and analysts were closely watching the potential impact of rising tensions between the U.S. and North Korea on oil markets. The U.S. on Monday called for the "strongest possible measures" against North Korea at an emergency U.N. Security Council meeting, a response to Pyongyang's testing of a hydrogen bomb this past Sunday.
"When global powers are gazing at each other the stock markets and ultimately oil demand will suffer," argued Tamas Varga, an analyst at oil brokerage PVM Associates Ltd.
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(END) Dow Jones Newswires
September 05, 2017 06:31 ET (10:31 GMT)