Gasoline Spikes To 7-Month Highs After Harvey; Heating Oil, Crude Jump

The entire energy futures complex is notably higher at the open with RBOB Gasoline spiking over 4% to its highest since January amid the carnage of Hurricane Harvey.

Bloomberg reports that as a result of Harvey, which was the strongest storm to hit the U.S. since 2004, some 2.26MM b/d of crude, condensate refining capacity in Texas remain shut while nearly 300,000 Texas customers are without power as of 12:30pm CDT. Major terminals and pipelines that move crude and fuel into and out of Houston-area refineries were also shut, potentially stranding some crude in West Texas and starving New York Harbor of gasoline.

“Gasoline prices are going to continue to rise this week as we expect another three days of rain in the Houston area,” Andy Lipow, president of consultant Lipow Oil Associates LLC in Houston, said by telephone.

 

"With pipeline operators beginning to shut down their crude oil and refined product infrastructure, I expect to see further curtailment of refinery operations, resulting in less product being available. A spike in gasoline and diesel prices will drag up crude oil prices.”

WTI is also higher as ~378.6k b/d of oil output from Gulf of Mexico is shut, pushing RBOB Gasoline and WTI higher.

Sept RBOB is exploding:

And Oct RBOB at its highest since Jan 2017:

The Oct. Nymex RBOB-WTI crack spread has spiked to $19.94:

NatGas and Heating Oil are also up:

And just in case it wasn't obvious, prices will likely rise “just because of worries, but the real impact might not be clear for a couple of days,” Michael Lynch, president of Strategic Energy & Economic Research told Bloomberg.

For now, the RBOB curve implies the system will be affected for at least 3 months...

Comments

ET (not verified) Sun, 08/27/2017 - 18:24 Permalink

Gold and Silver ready for liftoff.Litecoin is going to the moon.Gold and Silver will be racing past Litecoin.

ebworthen Sun, 08/27/2017 - 18:30 Permalink

Nothing like a good excuse to jack up cost at the pump.Kids back to school, and Labor Day almost here.Quick!  Raise the prices!  Holidays coming!

Oldwood jmack Sun, 08/27/2017 - 19:04 Permalink

rising gas prices makes sense if refineries are down, but crude should fall given those refineries can't accept oil if they can't refine it. It would only make sense that crude falls given there is reduced places to offload, and refineries will take a while to be able to process.But what do I know, and since when has supply and demand had anything to do with prices?

In reply to by jmack

jmack Oldwood Sun, 08/27/2017 - 20:45 Permalink

  What do you know?     how many oil producing platforms have shut down due to the hurricane requiring those platforms be evacuated. How long will that production be offline due to flooding in Houston?       since the market has opened, the CL front month contract is down 60 cents off its high....   so the market is responding to your thesis of the fundamentals, so is the market so wrong now that it is selling off, or were you wrong for whining like a bitch?  Why dont we let you retain your manhood, and just admit that markets are right.

In reply to by Oldwood

jmack Sun, 08/27/2017 - 18:43 Permalink

I know it has been almost a decade since a hurricane has been in the gulf of mexico, but for those of you too young or memory recall inhibited to know,  oil and gas rises when hurricanes come into the gulf.  They really spike when they hit your single largest central point of refining of hydrocarbons on the North American continent, aka Houston, Texas.     In fact, it used to be that hurricanes were so common, that oil and gas would rise merely because it was august...... just food for thought.

jmack totenkopf88 Sun, 08/27/2017 - 19:46 Permalink

make them take delivery, and you will have everyone pay a premium for those "assholes" having to "be right" for every decision they make.  Liquidity allows you to be wrong multiple times, and still make money with minimum risk.  Liquidity also allows you to most efficiently hedge your risk.   A market's only purpose is to remove risk, be that the producer, the speculator or the end user.        I highly reccommend you investigate that mechinism before you stratify your thinking into such an orthodox position.     Your "moneychangers" and "serfs" language is a whole 'nother discussion.

In reply to by totenkopf88

whatamaroon Sun, 08/27/2017 - 18:54 Permalink

I'm thinking I need to run out now and panic buy some gas for the truck. Would the run on gas cause more shortages and higher prices? Since the infinite wisdom of the pols of Texas (I am sure they weren't pressured by the MSM to pronounce it) says it's illegal to 'price gouge' would that cause shortages? Inquiring minds want to know.

swmnguy Sun, 08/27/2017 - 19:00 Permalink

The price of gas at the pump might be the most irrelevant statistic we always talk about.  I work at home and drive a Toyota Yaris in a city.  I buy about 10 gallons of gas per month, need it or not.  The difference between spending $20 and $50 is not the difference between living indoors and not.Most people drive more than I do.  Many of them really don't need to, but they do anyway.  Still, the difference betwwen $80 and $200 a month on gas, while significant for most people, still doesn't mean a huge difference in their lives.What does matter is that Finance used to be about 5% of economic activity, and now it's about 45%.  Not coincidentally, the purchasing power of a full-time job has dropped about by half, as the workforce has pretty much doubled due to the fact that it now takes 2 full-time incomes to support a median household, where it used to take one about 50 years ago.  That's what's referred to as "both sides of the same coin."  Which coin has become about 50% more thin.  It's your money's beach body!  Whoo!As long as people sucker themselves into living where they have to drive a car to get anything done, they won't notice that every transaction they make is about half the cost of finance, where it used to be about a nickel on the dollar.  And they will be too busy to understand why they have to work so much more to live at the same level as they used to.

Yen Cross Sun, 08/27/2017 - 19:19 Permalink

  Gas prices are disconnected from the price of oil it's pathetic.  Gas should be $1.50 a gallon based on crude prices. In Commiefornia they're maybe a $1.00 usd below what they were when WTI peaked $112.00 bbl in August 2013.  What a fucking farce!

FreeNewEnergy Sun, 08/27/2017 - 21:04 Permalink

I want a car that runs on apple juice. I live in the top apple-producing county in NY state. Of course, if I were to find such a vehicle, loving governor Cuomo would tax the fuck out of apple juice.Andy Cuomo is a communist, impersonating a mob boss. I hope he has severe agita after his seven course linguini fest tonight. (BTW: I'm half Italian and half Sicilian, so I get to call Italians Dagos and WOPS, like tha brothas do).Fuck him. Cuomo is a wold class asshole.Please note, I do not hold any personal grudge against the governor. I simply don't like him, I guess.

adr Sun, 08/27/2017 - 21:21 Permalink

Great, gas was already $2.59 before the storm and it will spike $.25 after the bullshit this morning. It will almost hit $3.00 for regular gas with oil under $50 and record gasoline stockpiles.