Crude dips, gasoline spikes as floods knock out one-fifth of U.S. refineries

Oil prices slid on Wednesday but gasoline spiked to their highest since July 2015 as flooding and storm damage in the wake of Hurricane Harvey has shut one-fifth of U.S. oil refineries, crimping demand for crude but raising fears of a fuel shortage.

U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $46.30 per barrel at 0359 GMT (11.59 p.m. ET), down 14 cents from their last close. Brent crude futures LCOc1 were down 20cents, at $51.80 a barrel. 

In the refined product market, price movements are more dramatic. U.S. gasoline prices RBc1 were 3.2 percent higher at $1.8391 per gallon on Wednesday. Prices earlier climbed to the most since July 31, 2015, at $1.842. 

Ultra-low sulfur diesel futures also gained 1.2 percent to $1.6854 a barrel and were earlier at their highest since Jan. 9 at $1.697. 

The largest crude oil refinery in the United States, Motiva Enterprises’ [MOTIV.UL] 603,000 barrel-per-day (bpd) Port Arthur, Texas, plant, was shutting down on Tuesday night because of flooding from Harvey, according to people familiar with the operations. 

Preparing for more rain and floods, Total (TOTF.PA) cut production to 53 percent of capacity at its 225,500 bpd refinery, also in Port Arthur, market sources said. 

Hurricane Harvey hit the U.S. Gulf coast last Friday. While it has been downgraded to a tropical storm, ongoing torrential rains have flooded numerous refineries in Texas and Louisiana, the heart of the American petroleum industry. 

At least 3.6 million bpd of refining capacity are offline in Texas and Louisiana, or nearly 20 percent of total U.S. capacity, based on company reports and Reuters estimates.

Beyond the impact of Harvey, the American Petroleum Institute (API) said late on Tuesday that U.S. crude inventories fell by 5.780 million barrels last week, an indicator that the U.S. oil market is gradually tightening.