Gasoline futures continued to soar Friday morning on the back of U.S. refinery and pipeline shutdowns caused by Hurricane Harvey.
The price of Nymex reformulated gasoline blendstock for September--the benchmark contract--was up nearly 14%, at $2.1470 a gallon, following eight days of gains that have driven prices up to two-year highs.
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"There are very severe supply disruptions and we don't know how long it's going to last," Olivier Jakob, managing director at oil consultancy Petromatrix, said of gas shortages across the U.S. "We have not had an event like this since 2005," he added, referencing Hurricane Katrina's impact on oil markets.
Warren Patterson, a commodities strategist at ING Bank, said that following Hurricane Rita in 2005, it "took up to two months for refinery run-rates in the U.S. to recover back to levels prior to the storm."
Since Harvey made landfall a week ago, the storm, which has since weakened to a tropical depression, has crippled more than 20% of U.S. refining capacity, according to analysts.
Retail prices for gasoline neared $2.49 a gallon Thursday evening, according the Oil Price Information Service, and are expected to keep rising.
Crude oil prices, meanwhile, fell in London midmorning trading on Friday, giving up some gains from the day prior.
West Texas Intermediate futures were trading down 1.19%, at $46.68 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, was down by 1.02%, at $52.32 a barrel on London's Intercontinental Exchange.
Prices had gained Thursday on news that production had been disrupted by Harvey and that Libyan output had declined as a result of pipeline disruptions.
But overall, crude prices have ailed since Harvey hit, as closed refineries have dried up demand for oil. WTI has been hit hardest with prices falling more than 2% since last week, while the WTI-Brent spread has widened to more than $5.
Oil prices should face further pressure in the coming weeks because U.S. crude stocks are likely increase, according to analysts at Commerzbank. "Crude imports and oil production in the Gulf of Mexico should be ramped up again more quickly than crude oil processing," the analysts wrote in a note Friday.
"This could put a question mark over the reduction of the oversupply and weigh on oil prices," the analysts added.
Among refined products, ICE gasoil changed hands at $509.75 a metric ton, up nearly 1% from the previous settlement.
Marina Force contributed to this article.
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(END) Dow Jones Newswires
September 01, 2017 06:55 ET (10:55 GMT)