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Texas oil refiners will take weeks to recover, boosting U.S. gasoline prices

Published 2021-02-19, 02:16 p/m
© Reuters.

By Laila Kearney

Feb 19 (Reuters) - Texas oil refineries shut by cold-weather disruptions may take several weeks to resume normal operations, industry experts said on Friday, helping to push up fuel prices.

About a fifth of oil processing was halted by power outages, shortages of natural gas and water this week. retail gasoline prices rose 6 cents on the week and are up 9 cents in the last month, to $2.33 a gallon, the American Automobile Association said. It forecast inventories would fall, keeping prices higher through month's end.

"We are 2-1/2 to three weeks away from restoring most operations" at affected refineries, said Andrew Lipow, president of Houston-based consultancy Lipow Oil Associates.

The refinery shutdowns will depress prices for U.S. crude oil and widen the spread between U.S. and Brent crude, Paul Sankey of independent energy researcher Sankey Research said in a note. He forecast "heavy pressure on US crude prices from returning supply into no demand from a major refining outage that will last 2-3 weeks."

U.S. crude futures CLc1 fell 1.5% on Friday, to $59.60 a barrel, as producers signaled plans to restart production. U.S. crude is up 22% year to date. U.S. gasoline futures on the New York exchange RBc1 rose to $1.805 per gallon. spreads tell me that crude oil will come back quicker" than refining margins, said Robert Yawger, director of energy futures at Mizuho Securities USA.

Refinery operators are assessing facilities and may need to repair any damage to pipelines, cooling towers and other equipment before slowly and carefully restarting, Lipow said.

Shortages and high prices for natural gas have also affected refiners. Texas officials this week asked natural gas suppliers to prioritize deliveries to electric utilities and residential customers, leaving less of the fuel to supply refinery operations, Lipow said.

Slowly resuming electricity and water needed to power the plants also is likely to cause delays at Texas Gulf Coast refineries beyond what is normal after business-pausing natural disasters such as hurricanes, he said.

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