Benchmark gasoline prices in the U.S. were down Monday to levels before Hurricane Harvey as refineries and pipelines in the Gulf Coast of the U.S. slowly return to activity, which has eased the concerns over supply.
Oil futures for Brent crude fell as well, after a strong nuclear test by North Korea triggered a move away from the crude markets to assets that were perceived safer like gold.
Brent fell 31 cents by midday in Europe to $52.43 per barrel. U.S. West Texas Intermediate crude futures were up by 13 cents on demand in the U.S. early Monday morning, hit by lower refinery activity, but recovered quickly.
Gasoline futures fell 4.3% to levels seen August 25, which was the day Harvey made landfall, crippling oil production and causing extreme and deadly flooding.
Nevertheless, the damage to the infrastructure for oil along the Gulf Coast appears to be not as extensive as first feared.
Many of the biggest refineries, which convert crude into different refined products like gas and jet fuel, and their distribution pipelines, gradually started to resume operations Monday.
Valero Energy’s refinery in Texas City that produces 225,000 barrels daily was the only plant up to normal output.
About 5.5% of the oil production in the Gulf of Mexico or only 96,000 barrels per day was still shut down as of Sunday, which was down from more than 400,000 barrels per day last week.
An industry consultancy said that the disruptions caused by Hurricane Harvey across the Gulf Coast of the U.S. have gradually cleared and it appears that thus far the industry as a whole did not receive major damage to its infrastructure or assets.
Traders have booked several dozen gas tankers the past week from Europe and Asia to the U.S. and Latin America some supply shortages following the refinery shutdowns.
Gasoline refining margins in Europe fell close to 20% on Monday.
While the government of the U.S. tapped strategic reserves of oil for just the first time over the past five years following last week’s hurricane, the International Energy Agency head said that the energy watchdog believe it is not necessary for a coordinated worldwide release of stocks of oil following the hurricane.
Greg Abbott the Governor of Texas estimated that his state’s damage from the store was between $150 and $20 million calling it higher than Hurricane Sandy or Katrina, which hit New York during 2012 and New Orleans 2005 respectively.