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Oil prices fall as refinery production dips in US

31 August 2017

"As of August 29, we estimate USA refining production offline was 4.1 million barrels per day (bpd); this represents 23 percent of total USA refining production", Goldman Sachs said in a note to clients.

The refinery closures helped to push USA gasoline futures to a two-year high of $1.7799 per gallon on Monday, though they had receded to $1.7466 by 1325 GMT on Tuesday.

Petrol futures surged yesterday to another two-year high and crude oil was down, as flooding and damage from Tropical Storm Harvey shut almost a quarter of U.S. refinery capacity, curbing demand for crude while raising the risk of fuel shortages.

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International Brent crude futures closed up 0.2 percent to $52.00 a barrel, U.S. West Texas Intermediate (WTI) crude edged down 0.3 percent to $46.44 a barrel, Reuters reported. Some refineries were preparing for restarts, but heavy rains are expected to last through Wednesday, adding to catastrophic flooding in Houston.

Operated by Motiva Enterprises, the largest crude oil refinery in U.S. was closed on Tuesday night due to flooding from Harvey.

Spot earnings for medium range (MR) tankers in the US Gulf may take a hit if refineries along the Texas coast remain shut in the wake of Hurricane Harvey.

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However, the assessment does not include the impact of storm Harvey. On Tuesday, US gasoline futures jumped four percent.

Crude markets were also eyeing disruptions in Libya and Colombia. WTI crude oil prices were down 0.8 percent in early Monday trading to under $48/bbl. The 280,000-bpd Sharara field, the OPEC member's largest, has been shut for around a week.

"Because that demand is gone that's where the selling pressure in the market is coming from", said Gene McGillian, manager of market research at Tradition Energy.

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In Colombia, a bomb attack by leftist ELN rebel group has halted pumping operations along the country's second-largest oil pipeline, the 210,000 bpd Cano-Limon Covenas, sources from the military and state oil company Ecopetrol said. Jefferies bank said it was lowering its fourth-quarter Brent oil price estimates to $55 a barrel from $60 and its 2018 forecast to $57 from $64.

Oil prices fall as refinery production dips in US