Domestic oil prices saw on their highest finish in three weeks on Tuesday as Gulf Coast refineries powered back up after the disruptions caused by last week’s Hurricane Harvey, according to Bloomberg MarketWatch.
October West Texas Intermediate crude oil advanced $1.37, or 2.9%, to settle at $48.66 a barrel on the New York Market Exchange.
November Brent oil, the global benchmark, rose $1.04, or 2%, to end trading at $53.38 a barrel—topping the $53 level for the first time since May.
“What happens next in the energy markets will be all about how quickly the refineries come back online, and when downstream operations are restored to normal,” said Tyler Richey, co-editor of the Sevens Report. “If the damage keeps refineries shut, expect further volatility and notable strength in the refined products, while a return to normal operations would be demand-side bullish for oil, and would see the products’ bid unwind.”
As of late Sunday, nearly 17% of the total domestic refinery capacity remained shut, according to S&P Global Platts.
Motiva’s Port Arthur, Texas refinery — the largest in the nation — is in the initial phases of starting up again, according to a company statement released on Tuesday. Motiva expects the refinery to return to approximately 40% production by the end of this weekend.
Demand for crude is set to rise as refinery capacity recovers. Meanwhile, the shortage has buoyed gasoline prices but that is likely to ease.
Inventory data for last week will be published by the American Petroleum Institute on Wednesday while being delayed for one day due to the Labor Day holiday. Official supply figures from the U.S. Energy Information Administration are slated for Thursday.
October natural gas lost 9.8 cents, or 3.2%, to settle at $2.972 per million British thermal units on the New York Mercantile Exchange.
Finally, Hurricane Irma is in the Atlantic and bearing down. The Category 5 storm’s anticipated track could land anywhere in the Gulf of Mexico to the state of Florida. Several models suggest that Puerto Rico and the Sunshine State will bear the brunt of Irma’s wrath although the Gulf states are not yet out of harm’s way.