Gasoline prices were trading up 4.37% at $1.7872-a figure $.20 higher than last week.
The shutdowns also led the USA government to tap its strategic oil reserves for the first time in five years on Thursday, releasing 500,000 barrels of crude to a working refinery in Louisiana. With the US crude overhang from Harvey poised to exceed 40 million barrels, near-dated Brent spreads could weaken and prices for the global benchmark could fall to $47 a barrel.
They now trade at $50.80 and $45.90 per barrel respectively.
“The current steep recovery follows yesterday’s steep drop”. USA crude was down 20 cents at $46.24 a barrel on Wednesday. It had fallen by just over 2 percent in the previous session.
“With U.S. continuously pumping more output, we expect the temporary impact of falling inventory to fade away in the upcoming months, thereby delaying market rebalance”, said Rahul Prithiani, director at CRISIL Research. Commodities strategists at Bank of America Merrill Lynchworry that it could happen again, with the global benchmark getting dragged down by the impact of Tropical Storm Harvey on USA crude prices.
Gasoline inventories rose by 476,000 barrels for the week ending August 25. They are now 14.5 percent below the record levels hit in March.
Others saw potential for operational refineries to delay typical September seasonal maintenance to benefit from high prices.
“Hence, the negative impact on crude oil demand and oil product supply might be less severe than feared”.
At the same time, the amount of crude entered into refineries reached a record high of 17.73 million bpd, the data showed.
“We believe the focus is set to shift away from USA crude inventory draws, not least as these withdrawals are less likely to continue, because of the coming seasonal soft patch and wrap-up of the driving season”, said Norbert Rucker, head of commodity research at Swiss bank Julius Baer. “But by the end of September I expect the situation to be nearly back to normal”, said Frank Schallenberger, head of commodity research at LBBW. The withdrawal in USA crude stocks is seen accelerating the market rebalancing targeted by the OPEC production cuts initiated earlier in the year, analysts said.