Oil prices bounce back after Harvey downgraded to tropical depression

Crude oil prices bounce back after a long side the following the hard hit on Texas energy centers from Harvey, now a tropical depression. File photo by Monika Graff/UPI

Aug. 31 (UPI) — A U.S. decision to take emergency measures to offset energy market strains from Tropical Depression Harvey in part helped boost crude oil prices early Thursday.

“In response to the impacts from Hurricane Harvey, the U.S. Secretary of Energy has authorized the Strategic Petroleum Reserve to negotiate and execute an emergency exchange agreement with the Phillips 66 Lake Charles Refinery [in Louisiana,]” department spokesperson Jess Szymanski said in a statement emailed to UPI.

Harvey was downgraded to a tropical depression early Thursday, after soaking parts of southern Texas with several feet of rain as a tropical storm earlier this week. The National Hurricane Center in Miami, Fla., said Harvey could still drop as much as 10 inches of rain on the Mississippi Valley.

“These rains will enhance the flash flooding risk across these areas, especially from far northern Mississippi, western Tennessee and into far southwest Kentucky,” the latest forecast read.

Rains and flooding have idled about 15 percent of the nation’s refinery capacity. The situation remains fluid as some refinery centers in Louisiana experience storm-related issues, while some in Texas are starting to resume operations.

Crude oil prices had been on a steep decline for much of the week because refinery outages meant oil was backing up in storage. Recovery emerged early Thursday after the SPR announcement and as some refiners started back up.

The price for West Texas Intermediate, the U.S. benchmark for the price of oil, was up 0.85 percent at 9:25 a.m. EDT to $46.35 per barrel. The global benchmark, Brent, was up 1.1 percent to $51.29 per barrel.

In terms of production, some operators working in the Eagle Ford shale basin in Texas, which was in Harvey’s path, restarted wells and pipeline operations. Offshore, some facilities were offline as of late Wednesday and about 18 percent of total production there was sidelined. Anadarko Petroleum, one of the largest operators in the Gulf of Mexico, said that it had turn on some of its facilities already on Monday.

Elsewhere, energy markets were unmoved by a report of strong gains in gross domestic product in the United States. An early-year assessment of long-term trends from the Federal Reserve Bank of Cleveland residual seasonality, a term that refers loosely to seasonal issues like holiday spending and summer demand, tends to skew the figures.

“This has caused a regular bounce-back effect where GDP growth appears to slow in the first quarter of the year and speed back up in the second quarter of the year,” the report read.

The U.S. Commerce Department reported Wednesday that real GDP increased at an annual rate of 3 percent during the second quarter, the strongest growth in more than two years. First quarter real GDP growth was 1.2 percent.


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