Crude prices slipped more than 1.5 percent lower on Tuesday as the market grappled with the shutdown of more than 16 percent of refining capacity in the United States after a hurricane ripped through the heart of the country`s oil industry.
U.S. gasoline futures were up about 4.8 cents by 12:21 p.m. (1621 GMT) That was well off the two-year high of $1.7799 per gallon hit the previous day on news of the refinery closures.
Worries about U.S. refining knocked crude prices lower despite disruptions in oil production elsewhere in the world.
U.S. West Texas Intermediate (WTI) crude edged down 62 cents or 1.3 percent to $45.95 a barrel at 12:34 p.m. EDT (1634 GMT). International Brent crude futures were down 20 cents or 0.4 percent to $51.69 a barrel.
The discount for U.S. WTI versus Brent rose to almost $6 a barrel, its widest in more than two years.
Motiva Enterprises was cutting production at the largest U.S. refinery due to flooding within the Port Arthur, Texas, sources said. Motiva has still not decided whether to shut down the refinery completely.
Sources told Reuters ExxonMobil was shutting its Beaumont, Texas refinery.
At least 3 million bpd of refining capacity is offline, or more than 16 percent of total U.S. capacity, based on company reports and Reuters estimates. The Gulf is home to nearly half of U.S. refining capacity.
"That’s a reason why we’re seeing lower oil prices as a whole," said Mark Watkins, regional investment manager at U.S. Bank, on the refinery damages, "We’re going to see a build up in crude inventories."
The damage assessment could lead to more volatility. Some refineries were preparing for restarts, but heavy rains were expected to last through Wednesday, adding to catastrophic flooding in Houston.
The storm has set a rainfall record for tropical cyclones in Texas, the National Weather Service said.
Refineries in Europe and Asia were gearing up to replace the lost oil products, while the International Energy Agency said it could release emergency oil stocks in the event of extended outages.
Tropical Storm Harvey, which has been downgraded from a hurricane, hit oil refiners harder than crude producers.
Barclays bank said in a note that the storm`s impact would "linger for several more weeks".
Crude markets were also eyeing disruptions in Libya and Colombia.
In Libya, militia pipeline blockades closed three oilfields and forced state-run National Oil Corp to declare force majeure at several sites.
In Colombia, a bomb attack by the leftist ELN rebel group halted pumping operations along the country`s second-largest oil pipeline.
Yet crude remains in ample supply. Jefferies bank said it was lowering its fourth-quarter Brent oil price estimates to $55 a barrel from $60 and its 2018 forecast to $57 from $64.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)