Hurricane Harvey, a category four hurricane, hit Texas coastlines hard this weekend.
Prompt US gasoline differentials in the Gulf Coast hit a five-year high.
Texas is home to 5.6 million bpd of refining capacity, and Louisiana has 3.3 million bpd.
Overall, the Gulf area is home to refineries and other operations that account for almost one-third of the nation's capacity to turn oil into gas, diesel and other products. It has since been downgraded to a tropical storm, but it is slow-moving and has dropped as much as two feet of rain on Houston already. Sources said the Motiva Port Arthur refinery in Texas, the country's largest refinery, was considering shutting down as water poured into the plant. But it continued to dump huge amounts of rain on Houston and cause unsafe flooding that could get worse.
In turn, USA crude futures fell as the refinery shutdowns could reduce demand for American crude. Texas houses some 4.944 million barrels per day in refining capacity.
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In its petition in 2003, the IRCG had sought court's directions to the government to pay compensation towards damage of religious places.
About 22% of the oil produced in the Gulf was shut down as of Sunday, according to the Interior Department's Bureau of Safety and Environmental Enforcement. In addition to 270,000-barrel per day Sharara, El Feel, which pumped over 26,000 bpd in April, has also stopped production, a source from the Petroleum Facilities Guard that controls security at the field.
While most refineries will be able to resume operations a week or two after the rains end, "some may delay restarting and perform their fall maintenance a few weeks early", Williams added.
Further disruptions to oil production and shipments could flip the market to more bullish sentiment.
"My hope has been that as investors were given further evidence of inventory draw-downs, both in the OECD and in the USA, that you would have seen that expressed in a higher spot and higher strip price for oil", Eric Nuttall, senior portfolio manager with SPR & Co, the interim holding company following Sprott Asset Management's recent management-led buyout.
Kloza said that normally refining is knocked offline for just a brief time, making the impact on prices fleeting.