Gasoline prices have exploded higher once again this morning - topping the Maginot Line of $2.00 for the first time since July 2015 - following reports that the main conduit for fuel from the Gulf to the East Coast has been shut due to Hurricane Harvey.
Motor fuel prices climbed as much as 6.6 percent in New York, advancing for an eighth session, while crude oil was little changed. Harvey has shuttered about 23 percent of U.S. refining capacity, potentially cutting fuel-making ability to the lowest level since 2008 and depriving the Colonial Pipeline of supplies.
Its operator was forced to shut the main diesel line late Wednesday and planned to halt its gasoline line Thursday, meaning motorists from Maine to Florida may soon see higher prices at the pump.
Colonial, which is the biggest single fuel transporter in the US, shipping more than 2.5m barrels a day on its line - or roughly one in every eight barrels of fuel consumed in the country - said in a statement late on Wednesday that its line carrying diesel and jet fuel would shut on Wednesday evening, followed by its gasoline pipe on Thursday.
And that sent front-month RBOB above $2...
Additionaly, WTI prices are lower following news that the strategic petroleum reserve has authorized release of 500,000 barrels of crude to Phillips 66 Lake Charles refinery...
As gasoline surged to a two-year high, U.S. oil prices lost about 4 percent since Harvey made landfall as demand from refiners fell. As Bloomberg notes, this sent cracks -- the premium of the refined fuel over crude -- higher in New York, while the storm also triggered a flurry of trans-Atlantic gasoline trading and disrupted exports of liquefied petroleum gas, causing prices to rise in Asia.
“Harvey is driving cracks to the sky,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. “Crude oil prices have declined while oil product prices have increased.”