Canadian-owned refineries expected to register higher profits amid Gulf Coast disruption

The Valero Houston Refinery threatened by the swelling waters of the Buffalo Bayou after Hurricane Harvey inundated the Texas Gulf coast

The Valero Houston Refinery threatened by the swelling waters of the Buffalo Bayou after Hurricane Harvey inundated the Texas Gulf coast

Harvey made landfall in South Texas last Friday, leading to coastal flooding and swamping of much of Houston.

The refinery outages from Hurricane Harvey have left a very large, if temporary, void in the refined product supply, a space set to be filled by refiners located far from the flood ravaged coast of Texas.

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.

US gasoline futures on Tuesday rose 0.9 percent to $1.73 a gallon, and have jumped about 6 percent since last Wednesday's prestorm close. As a result, the discount for U.S. WTI versus Brent surpassed $5 a barrel, its widest in more than two years. Brent oil, the global benchmark for crude trading, was down 43c at $51.57 (R671.38) a barrel and crude fell 25c to $46.19. It had fallen more than 2 percent in the previous session.

When the US can't produce enough gasoline or diesel to meet export demands, other regions are forced to look for replacement supplies "and the backfill has to come from further away", said Richard Joswick, an analyst with S&P Global Platts. The jump came after the Colonial Pipeline, the biggest USA fuel system, said it would shut its main lines to the Northeast by Thursday, hit by outages at pumping points and lack of supplies from refiners. "Those elevated gasoline prices did stick around for nearly three months until those refineries were back on line", she said.

The storm caused the closure of many oil platforms in the Gulf, and about a fifth of the region's oil output remained shut down, according to United States authorities.

Joel Osteen opens church to storm victims after social media outrage
Lakewood posted a message to social media on Sunday, providing shelter information and saying the church had been flooded. The Houston Lakewood Church has a capacity of nearly 17,000 but it has not been open to evacuees since the storm hit.

Industry sources told Reuters yesterday that Shell staff are reboarding the Perdido oil and gas platform in the Gulf of Mexico in preparation for a restart.

At the same time, the amount of crude entered into refineries reached a record high of 17.73 million bpd, the data showed. Colonial did not indicated how long it expects the closure to last.

Analysts at JBC Energy said that figure could slip to as low as 15-16 million bpd.

Marathon Petroleum Corp. was shutting two refineries in the Houston area on Tuesday because of flooding, according to sources familiar with plant operations. USA crude was down 44 cents, or 0.95 percent, to $46.00. "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.

This may have notable impacts on gasoline prices in the region, which could spread to other markets, the agency said - particularly the East Coast, which is largely dependent on shipments of transportation fuels from the Gulf Coast.

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