RBOB gasoline futures are on the rise for the seventh day in a row as it has been confirmed that the Colonial Pipeline is running at reduced rates, raising the real possibility of gas and diesel and even jet fuel shortages. Colonial Pipeline Co. said Tropical Storm Harvey affected its Houston origin, which includes Pasadena, Houston, and Cedar Bayou.
The Gulf Coast and Houston are in our prayers as they face unprecedented challenges in the aftermath of Hurricane Harvey. Hurricane Harvey, the strongest Texas hurricane in 50 years, brought record rainfall and unprecedented flooding. It may take years for the area to recover and it is going to be a historic challenge for the U.S. energy sector. The storm has shut about 15% of U.S. refining, cutting fuel-making capacity output by an estimated 2.2-2.7 million barrels a day.
The crude oil trade has been totally eclipsed by the focus on the so-called glut of crude even as the oil market, due to massive supply withdrawals, is the tightest it’s been in years when you compare it to record demand. The forward demand cover on oil supply in the United States has fallen to 26.7 days of supply, which is the lowest since Oct. 2, 2015.
Tropical Storm Karen retained its strength as the system encountered shearing winds on a path through the Gulf of Mexico to the U.S. coast. The storm is no longer expected to become a hurricane, forecasters said.
The market is taking in stride the first potential hurricane in the Gulf of Mexico this season as its seems a bit more worried about a government shutdown ahead of a looming deadline over the fiscal ceiling debate.