Gasoline prices head higher following Hurricane Harvey

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The National Hurricane Center (NHC) said in its latest update that flooding and heavy rain continued in eastern Texas and western Louisiana.

Texas Gov. Greg Abbott tried to reassure drivers that there is plenty of gasoline.

That's down 14.5 percent from record levels reached in March.

Harvey was the strongest storm to hit the state in more than 50 years, forcing operators to shut refineries, pipelines and ports.

Benchmark U.S. gasoline prices slid for the first day since Hurricane Harvey struck the U.S. oil industry heartland, as some refineries restarted operations, while oil prices remained under pressure and settled about flat.

More refinery closures could come as the storm has made landfall in Louisiana, which has 3.3 million barrels of refining capacity.

Restarts following a storm are often the most unsafe times for refiners, though the Corpus area received much less rain than the Houston metro area.

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"It means if something goes wrong it's a big impact".

But the move has revived growth in the USA oil industry, with production and exports hitting new highs - until Harvey.

Brent oil, the global benchmark for crude trading, was down 52 cents at $51.48 a barrel by 1339 GMT.

The spread between Brent and US crude hit its widest in more than two years on Wednesday before settling at $4.90.

United States crude futures fell in early Asian trading on Friday, partly reversing sharp gains from the previous session, amid ongoing turmoil in the oil industry with almost a quarter of USA refining capacity offline.

Gasoline margins RBc1-CLc1 climbed, as the gasoline crack spread jumped to $24.02 a barrel early in the session, the highest on a seasonal basis since 2012.

"Crude is always easier to replace than products", said Olivier Jakob, analyst at Petromatrix.

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"At this point, we're really waiting to see what the cumulative effect will be" from Harvey, said Paul Hesse of the U.S. Energy Information Administration. The price spike is more dramatic in some states such as Georgia, where the average cost per gallon of regular gas has climbed from $2.22 a week ago to $2.39 now.

Energy Secretary Rick Perry said Thursday he is releasing 500,000 barrels of crude oil from an emergency stockpile in a bid to prevent gasoline prices from spiking in the wake of disruptions caused by Harvey, according to the Associated Press.

The closures rattled global fuel markets, and European and Asian traders diverted millions of barrels of gasoline and diesel to the Americas to help fill the gap.

The reduction in fuel supplies has forced the Colonial Pipeline, which supplies fuel from refineries near the Gulf of Mexico to the US Northeast, to reduce supplies.

The market shrugged off weekly inventory figures from the U.S. Energy Department, which reflect stocks prior to the storm. It now is at 679 million barrels. Refining capacity utilization rose to 96.6 percent, the highest since 2005, a figure that will fall sharply due to massive shut-ins on the Gulf.

In Texas, Shell was assessing the impact of Harvey, but a spokesman did not respond to a question about the status of its Sugarland terminal in St. James, used for crude exports.

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