Suspension of US Oil Production in Gulf of Mexico Reaches 6%

Hurricane Harvey : Petrol shortage hits America, fuel prices go up

Motorists in the region are now paying about 41 cents more per gallon than they were on August 25, the day the hurricane came ashore on the Texas Gulf Coast as a Category 4 storm.

While Trump's approval ratings remain well underwater, Americans tend to give him better grades for his handling of the economy.

The White House got good news on two key economic numbers this week.

"Everyone is just grappling with the spate of storms that are populating the Gulf", said John Kilduff, a partner at Again Capital. That would also raise the stakes for a massive tax reform push Trump and congressional Republicans are undertaking this fall.

"Harvey is going to have a longer effect on the oil industry than anyone would have imagined", said Dan Katzenberg, an oil industry analyst at R.W. Baird & Co. In total, the hurricane had idled 24% of America's 18 million barrels-per-day (bpd) refining capacity. Another storm is developing behind Irma in the Atlantic, and an area of bad weather in the southwest Gulf of Mexico threatens to become a tropical storm in the next two days. Forthcoming data release from the EIA will offer a clearer picture on what the Hurricane has done to US oil storage, refined product supply, and oil production.

This would render meaningless a suggestion from Yoshihide Suga, chief cabinet secretary for Japan, who said in the wake of the latest nuclear test that sanctions options against North Korea include restrictions on oil-products trade.

Traders reacted accordingly. Gasoline futures spiked 13.5 percent on Wall Street on Thursday, raising the likelihood consumers will deal with even higher prices before operations return to normal in the Gulf.

The industry's challenge now is to take the lessons it is learning from Harvey to minimize disruptions from future hurricanes.

The US government pulled out of the strategic petroleum reserve for the first time in five years and agreed on Friday to release an additional 3.5 million barrels over one million barrels, after it already agreed to withdraw for a refinery in Louisiana. AAA says the temporary shutdown of some refineries along the Gulf Coast will delay that decline, but that it expects prices will eventually come down.

It said there are high levels of stocks in the affected regions and in the US as a whole and these stocks are being supplemented by imports of gasoline to the US East Coast.

The number of active oil and gas rigs in the United States rose this week by 3 rigs, largely dispelling earlier analyst notions that Hurricane Harvey would delay as much as 10 percent of upcoming fracking work, and suspend roughly half the rigs in Eagle Ford.

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