U.S. gasoline price sink as Harvey subsides
Benchmark U.S. gasoline prices fell by more than 4 percent on Monday as oil refineries and pipelines in the U.S. Gulf Coast slowly resumed activity after Hurricane Harvey subsided, easing concerns over supply shortages in the world`s top oil consumer.
Brent crude oil futures were however trading lower, down 40 cents at $52.35 a barrel by 0915 GMT, after a powerful North Korean nuclear test triggered a shift away from crude markets to assets perceived to be safer, such as gold.
U.S. West Texas Intermediate (WTI) crude futures were more stable, up 6 cents at $47.35 barrel. NYMEX gasoline futures were down 4.2 percent to $1.6755 a gallon, levels last seen on Aug. 25, the day Harvey struck.
Damage to the oil infrastructure in the Gulf Coast hub by Harvey appeared less extensive than some had feared, boosting the outlook for demand in the world`s top oil consumer.
A number of major refineries, which convert crude oil into refined products such as gasoline and jet fuel, as well as distribution pipelines were gradually resuming operations.
"The disruptions from Hurricane Harvey in the U.S. Gulf Coast are gradually clearing. In the broader scheme of things, it appears that so far the energy industry was spared major damages to assets and infrastructure," analysts at Vienna-based JBC Energy said in a note.
"However, some Houston area refineries will likely remain offline for some time longer."
Storm Harvey made landfall along the Gulf coast of Texas and Louisiana last week, knocking out almost a quarter of the entire U.S. refining capacity, causing a price spike and supply gap for fuels like gasoline, which traders around the world have been scrambling to fill.
About 5.5 percent of the U.S. Gulf of Mexico`s oil production, or 96,000 barrels of daily output, remained shut on Sunday, the Federal Bureau of Safety and Environmental Enforcement said.
Texas Governor Greg Abbott estimated damage at $150 billion to $180 billion, calling it more costly than Hurricanes Katrina or Sandy, which hit New Orleans in 2005 and New York in 2012.
Traders were nervously eyeing developments in North Korea, where the military conducted its sixth and most powerful nuclear test over the weekend. Pyongyang said it had tested an advanced hydrogen bomb for a long-range missile, prompting the threat of a "massive" military response from the United States if it or its allies were threatened.
That put downward pressure on crude as traders moved money out of oil - seen as high-risk markets - into gold futures, traditionally viewed as a safe haven for investors. Spot gold prices rose for a third day, gaining 0.9 percent on Monday.
Overall trading activity in oil futures market is expected to be low on Monday due to the U.S. Labor Day public holiday.