The most populous city in the state of Texas and the 4th most populous city in the United States has been brought to its knees by Mother Nature and a Hurricane named Harvey. Catastrophic flooding, which is expected to peak by Wednesday or Thursday, has crippled the nation’s refining and petrochemical hub potentially for weeks to come. RBOB prices hit a two-year high early this morning touching an intraday high of $1.7799 a gallon. Gasoline and distillate refinery margins are up 21% and 10% respectively as of 12 pm EST. RBOB for September delivery is up $0.0696 at $1.7362, Heating Oil is up $0.0114 at $1.6353. But WTI for September delivery is feeling the demand effects of the storm and is down 3.36% at $46.26 bbl. Technically, RBOB found some resistance at $1.7714 (a high made on April 12th of this year) but definitely on the path of least resistance towards the 12-month channel-top of $1.8163.
More than 2 million barrels of refining capacity has been shut in already and it will most likely take days to weeks for them to fully return. Below is a list of some of the refineries and their capacity that have been, or may be affected:
All energy market participants’ eyes will be on the swing back of Tropical Storm Harvey on to the coasts of Texas and Louisiana and more importantly, Motiva’s Port Arthur, Texas refinery. If the refinery in Port Arthur, Texas does shutdown, we are all in for a long ride to the upside. In the meantime, our thoughts are with all Coastal Texans and Houstonians. Be safe, help those in need, and continue to batten down the hatches.