Gasoline prices in the United States fell by over 4 percent on Monday, as oil refineries and pipelines in the Gulf Coast resumed work following Hurricane Harvey, which has eased worries over the shortage in supplies for oil consumers, Reuters reported.
Brent crude oil futures were, however, trading lower, down 40 cents at $52.35 a barrel by 0915 GMT, after a powerful North Korean nuclear test triggered a shift away from crude markets to assets perceived to be safer, such as gold.
U.S. West Texas Intermediate (WTI) Clc1 crude futures were more stable, up 6 cents at $47.35 barrel. NYMEX gasoline futures RBc1 were down 4.2 percent to $1.6755 a gallon, levels are last seen on Aug. 25, the day Harvey struck.
Oil infrastructure damage in the Gulf Coast hub was not as some had feared, which has boosted the demand outlook for oil consumers. Several large refineries converting crude oil into refined gasoline and jet fuel, as well as some distribution pipelines slowly resumed activities.
“The disruptions from Hurricane Harvey in the U.S. Gulf Coast are gradually clearing. In the broader scheme of things, it appears that so far the energy industry was spared major damages to assets and infrastructure,” analysts at Vienna-based JBC Energy said in a note.
“However, some Houston area refineries will likely remain offline for some time longer.”
Storm Harvey made landfall along the Gulf coast of Texas and Louisiana last week, knocking out almost a quarter of the entire U.S. refining capacity, causing a price spike and supply gap for fuels like gasoline, which traders around the world have been scrambling to fill.
About 5.5 percent of the U.S. Gulf of Mexico’s oil production, or 96,000 barrels of daily output, remained shut on Sunday, the Federal Bureau of Safety and Environmental Enforcement said.
Greg Abbott, Governor of Texas, made an estimation on damages, at some $150 billion, noting it was far more costly Hurricanes Katrina or Sandy, that hit New Orleans in 2005 and New York 2012.
Traders were nervously eyeing developments in North Korea, where the military conducted its sixth and most powerful nuclear test over the weekend. Pyongyang said it had tested an advanced hydrogen bomb for a long-range missile, prompting the threat of a “massive” military response from the United States if it or its allies were threatened.
Overall trading activity in oil futures market is expected to be low on Monday due to the U.S. Labor Day public holiday.