Investing.com – Crude futures settled higher on Thursday, but ended the month in negative, following concerns over an uptick in crude supplies after floods knocked out nearly a third of US oil refineries.
On the New York Mercantile Exchange crude futures for October delivery rose $1.27 to settle at $47.23 a barrel, while on London's Intercontinental Exchange, Brent added $2 to trade at $52.73 a barrel.
Nearly a week after Storm Harvey first made landfall in the U.S. oil heartland of Texas, almost a third of U.S. oil refining capacity has been taken offline, representing roughly 4.4 million barrels per day.
The slew of refinery shutdowns stoked fears of a fuel shortage, forcing the U.S. government to tap its strategic oil reserves and release 500,000 barrels of crude to a working refinery in Louisiana.
Following a week of heavy selling pressure, crude prices settled nearly 6% lower in August and remain on track to post a fifth straight week of losses. The selloff in crude futures is not expected to fade over the short-term as analysts expect crude supplies to increase amid the slump in refinery activity.
“Next week’s EIA data should see large draws in products due to refinery outages, prompting large builds in oil inventories,” said John Macaluso, an analyst at Tyche Capital Advisors. About 1.4 million barrels of extra oil that “won’t be refined to fuels will be sent to storage as long as refineries are shut-in.”
Meanwhile gasoline futures spiked to a more-than-two-year high on Thursday, following a report that the largest U.S. refinery could remain offline for up to two weeks, adding to fears of a fuel shortage.
The sharp rise in gasoline prices comes a day after the Energy Information agency said gasoline inventories unexpectedly rose by roughly 35,000 barrels, missing expectations of a draw of 989,000 barrels.