US retail gasoline prices climbed on Tuesday, even as oil refineries rumbled back into service after Hurricane Harvey disrupted operations along the Texas coast.
U.S. West Texas Intermediate (WTI) crude futures, however, were up 34 cents at $47.63 barrel as U.S. demand, hit by reduced refinery activity since Harvey made landfall on August 25, recovered.
"Oil market participants have become used to tropical storms causing no lasting damage to the energy infrastructure".
This is unfortunate for motorists but it is a reflection of the global free market in which Irish retailers are mere price-takers.
These impacts are in line with what happened during Hurricanes Katrina and Rita which saw gasoline spot prices rise almost 30 percent within one trading day of Katrina's landfall in Louisiana.
In Delaware, its up $2.69 cents. However, there is an argument that this temporary shift will provide an opportunity, as the gap between crude and gasoline, alongside Brent and WTI, is likely to tighten as operations come back online. It is likely to have an impact on gasoline demand. Overall, gas prices are pennies away from topping the highest price of $2.67 that Americans have paid for a gallon of gas in more than two years.
As Texas dries out from Harvey, all eyes are on Hurricane Irma, now a Category 5 hurricane, which currently is expected to hit the Leeward Islands of the Caribbean on Tuesday night into Wednesday.
"The upgrade of Hurricane Irma may have spurred some precautionary buying of crude oil", said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen.
Russian Energy Minister Alexander Novak said that Brent crude will be within the range of $45 to $55 a barrel next year.
"Oil markets this week will continue to be a weather market", Switzerland-based consultant Petromatrix said in an emailed report.
Fuel storage data on Wednesday from the American Petroleum Institute and on Thursday from the Energy Information Administration is expected to give a better view of the extent of Harvey's impact on US fuel inventories. 16 levels, with the aim of reining in the global oil glut and sending prices higher. USA refineries increase their oil demand as they recover from recent flooding.
In other energy products, October natural gas rose by 1.4 per centto $3.014 per million British thermal units.
October gasoline futures in NY dropped as much as 1.5% to $1.6740 a gallon, falling for a third session.