Oil prices rose nearly 1 percent on Friday as the dollar fell and the U.S. Gulf Coast braced for Hurricane Harvey, which could become the biggest storm to hit the United States mainland in more than a decade.
The dollar <.dxy>, in which oil is priced, fell after Federal Reserve Chair Janet Yellen made no reference to U.S. monetary policy in her speech at the annual central bank research conference in Jackson Hole, Wyoming.
Harvey became a Category 2 storm as it crossed the Gulf of Mexico with winds of 110 mph (175 kph), 145 miles (235 km) off Port O`Connor, Texas, the National Hurricane Center said.
Refineries, terminals, onshore and offshore production operations and other infrastructure have shut or begun storm preparations with Harvey set to make landfall on the Texas coast on Friday night or early on Saturday as a Category 3 hurricane.
The NHC, which has warned that catastrophic flooding was expected across portions of southern and southeastern Texas, expects Harvey to move slowly and linger over Texas for days.
Some tracking models show the storm could circle back out over Gulf waters after making landfall, and then take aim at Houston midweek, giving the nation`s four most populous city a double dose of rain and wind.
U.S. crude futures
U.S. gasoline futures
Gasoline crack spreads
Gulf Coast conventional cash gasoline prices
"The inmates are running the asylum in gasoline and distillate with cracks and spreads up strongly as the latest forecasts show 20 inches (51 cm) of rain for the Corpus to Houston area of Texas," said Scott Shelton, broker at ICAP in Durham, North Carolina.
"Wind and rain and the unknown effects of both generate a `Get me flat` mentality in futures and the cash markets which has resulted in strength in both."
Energy companies have pulled workers from offshore oil platforms and halted onshore drilling in south Texas.
A little less than 10 percent of offshore U.S. Gulf of Mexico crude output capacity and nearly 15 percent of natural gas production had been halted by midday on Thursday, government data showed.
Three refineries in Corpus Christi and one farther inland at Three Rivers were shutting down ahead of the storm. Two others reduced output as ports were closed.
Texas is home to 5.6 million barrels per day of refining capacity, and Louisiana has 3.3 million barrels.
Beyond the storm`s potential impact on the oil industry, crude remains in ample supply globally despite efforts led by the Organization of the Petroleum Exporting Countries (OPEC) to hold back production to prop up prices.
A joint OPEC and non-OPEC monitoring committee said an extension to the supply pact beyond March was possible, though not yet decided.
Part of the reason for the crude glut has been a 13 percent jump in U.S. output since mid-2016 to 9.53 million bpd, close to the record 9.61 million bpd hit in June 2015.
U.S. energy firms cut oil rigs for a second week in a row according to Friday data from Baker Hughes. Drillers cut four oil rigs in the week to Aug. 25, bringing the total count down to 759.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)