Article Highlights

  • Goldman Sachs says 23 pct of U.S. refining capacity is shut
  • Crude dips on expected fall in demand from refineries
  • Gasoline hits more than two-year high
  • AP says U.S. crude inventories fell, EIA report due
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Crude oil slid and gasoline jumped to its highest since mid-2015 on Wednesday as flooding and storm damage from Hurricane Harvey shut nearly a fifth of U.S. refineries, curbing demand for crude while raising the risk of fuel shortages.

Refineries with output of 4.1 million barrels per day (bpd) were offline on Tuesday, representing 23 percent of U.S. production, Goldman Sachs said in a report. Restarting plants even under the best conditions can take a week or more.

“It will be a while before operations can return to normal and the U.S. refining industry is bracing itself for an extended shutdown,” said Stephen Brennock of oil broker PVM.

Brent crude, the international benchmark for crude trading, was down 30 cents at $51.70 a barrel by 0825 GMT. U.S. crude fell 25 cents to $46.19.

In refined products, price movement was more dramatic. The largest refinery in the United States was shutting down because of flooding, said sources familiar with operations.

U.S. gasoline was up more than 3 percent at $1.8392 a gallon. Prices had touched $1.8422, the highest since July 2015.

Diesel advanced by 1.7 percent to $1.6944 a gallon, having touched its highest since Jan. 9 at $1.6966.

Harvey made landfall on Friday as the most powerful hurricane to hit Texas in more than 50 years, resulting in the death of at least 17 people.

In addition to shutting oil refineries, about 1.4 million bpd of U.S. crude production has been disrupted, equivalent to 15 percent of total output, Goldman Sachs said.

The impact of the storm overshadowed the latest weekly figures on U.S. oil supplies from the American Petroleum Institute (API).

U.S. crude inventories fell by 5.78 million barrels last week, the API industry group reported on Tuesday, suggesting a gradual tightening of the U.S. oil market. The figures, however, do not reflect the impact from Harvey.

Traders are awaiting the latest U.S. government inventory report, due at 1430 GMT from the Energy Information Administration, to compare with the API figures.