Open Live Account

(Bloomberg) — Crude and gasoline futures both climbed to levels not seen since before the pandemic as Hurricane Laura rattled toward a key stretch of the U.S. Gulf Coast that is home to the nation’s greatest concentration of refining capacity.

U.S. gasoline futures jumped 2.1% and crude futures added 1.7% Tuesday, bringing both contracts to the highest since early March. The storm is expected to make landfall late Wednesday or early Thursday along the Texas-Louisiana coast as a Category 3 hurricane, according to the National Hurricane Center. More than 84% of oil output in the Gulf of Mexico has shut and refiners including Exxon Mobil Corp (NYSE:XOM). and Citgo Petroleum Corp. have reduced operations or closed plants in preparation.

“The energy patch is facing a potentially cataclysmic situation in the next 48 hours,” in part as forecasts show “the storm on a collision course with some of the largest refineries in the world,” Bob Yawger, director of the futures division at Mizuho Securities USA, said in a note.

The spread between the September and October gasoline contracts rose to as high as 15 cents per gallon during the session, the widest backwardation in a year. The price action “implies the market is worried about extreme shortage,” Yawger wrote.

Some of the largest U.S. refineries are shutting in advance of Laura, affecting nearly 3 million barrels a day of capacity along the U.S. Gulf Coast, according to a Bloomberg calculation. That’s about one third of the Gulf Coast refining capacity, according to figures from Lipow Oil Associates.

Still, the hurricane will likely only have a short-term impact on prices with this year’s lackluster summer driving season nearing an end and a pickup in consumption remaining questionable due to the coronavirus pandemic.

“Even if the resumption of offshore production were to be slow, increasing the loss of supply, there is a large inventory buffer that precludes a sudden tightening of crude oil availability to refiners when they resume their operations,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas (OTC:BNPQY) SA in London.

U.S. crude stockpiles are currently at the highest seasonal level in decades, according to Energy Information Administration data.

U.S. crude inventories fell by 4.52 million barrels last week and gasoline stockpiles fell by more than 6 million, the industry-funded American Petroleum Institute reported, according to people familiar. If confirmed by the EIA report on Wednesday, it would be the fifth-straight weekly decline in crude stocks. On the other hand, the API report showed another build in distillate supplies.

“The severe gasoline draw reflects careful inventory management for refiners and distributors to not be stuck with higher quality than they need come the middle of September,” as specifications change for the winter season, said Tom Finlon of GF International.

Meanwhile, cash-market gasoline for Colonial Pipeline loading outside Houston rose to the highest in eleven months on Tuesday morning as retailers sought to secure supplies ahead of Laura.

©2020 Bloomberg L.P.

Source :

Legal: This website is operated by TRBHInternational Limited
Trading Rebate Broker is the TRBHInternational Limited , Room 2204,299QRC, 287-299 Queen’s Rond,Central
TRBHInternational Limited was incorporated on 05-JUN-2020 as a Private company limited by shares registered in Hong Kong. It’s company registration number is: 2949329.

Hong Kong Companies Directory – About TRBHInternational Limited’s information may come from different sources and aggregate fill. All information published on our website are for reference only. If you want to update any information on this page, please use your company’s official email account to contact us. When you give us your information, you do not need to spend any cost. Our goal is to help every business growth. This information may have been updated since the last change,please visit the official website of hong kong companies registry to check the latest results.

Risk Warning: Forex and CFD trading involves a significant risk to your invested capital. Please read and ensure you fully understand our Risk Disclosure.