Oil markets roiled as Harvey hits US petroleum industry

MOSCOW (MRC) - Oil markets were roiled on Monday after Tropical Storm Harvey wreaked havoc along the US Gulf Coast over the weekend, crippling Houston and its port, and knocking out several refineries as well as some crude production, said Reuters.

US gasoline prices hit two-year highs as massive floods caused by the storm forced refineries in the area to close. In turn, U.S. crude futures fell as the refinery shutdowns could reduce demand for American crude. Brent futures steadied as pipeline blockades in Libya slashed the OPEC state's output by nearly 400 Mbpd.

Harvey is the most powerful hurricane to hit Texas in more than 50 yr, killing at least two people, causing large-scale flooding, and forcing the closure of Houston port as well as several refineries. The US National Hurricane Center said Harvey was moving away from the coast but was expected to linger close to the shore through Tuesday. It said floods would spread from Texas eastward to Louisiana.

Texas is home to 5.6 MMbpd of refining capacity, and Louisiana has 3.3 MMbpd. Over 2 MMbpd of refining capacity was estimated to be offline as a result of the storm. Spot prices for U.S. gasoline futures surged 7 percent to a peak of $1.7799 per gallon, the highest level since late July 2015, before easing to USD1.7341 by 1341 GMT.

U.S. traders were seeking oil product cargoes from North Asia, several refining and shipping sources told Reuters, with transatlantic exports of motor fuel out of Europe expected to surge. "Global refining margins are going to stay very strong," said Olivier Jakob, managing director of Petromatrix. "If (U.S.) refineries shut down for more than a week, Asia will need to run at a higher level, because there's no spare capacity in Europe."

About 22%, or 379 Mbpd, of Gulf production was idled due to the storm as of Sunday afternoon, the US Bureau of Safety and Environmental Enforcement said.

There might also be around 300 Mbpd of onshore U.S. production shut in, trading sources said. Brent crude futures were up 2 cents at USD52.43 per barrel. US West Texas Intermediate (WTI) crude futures were down 50 cents at USD47.37.

The price moves pushed the WTI discount versus Brent to as much as USD5.24 per barrel, the widest in two years.
MRC

MOSCOW (MRC) - All residents within 1.5 miles (2.4 km) of a chemical plant in southeast Texas were evacuated on Tuesday as a “precautionary measure” because of the rising risk of an explosion, the local fire marshal’s office said in a Twitter message, said Reuters.

Earlier on Tuesday, the owner of the plant, Arkema SA, said in a statement the situation at its Crosby, Texas, plant “has become serious” and evacuated all of its staff from the facility.

Crosby is about 25 miles (40 km) northeast of Houston and in the 2010 U.S. census had a population of 2,300 people. “As a protective measure Harris County has evacuated all residents within 1.5 miles of the Arkema facility,” said a Twitter message from the Harris County Fire Marshal Office.

“There is a potential for a chemical reaction leading to a fire at the facility, which could produce a large amount of black smoke,” the fire marshal, citing Arkema, said.

“While we do not believe there is any imminent danger, the potential for a chemical reaction leading to a fire and/or explosion within the site confines is real,” the company said. Arkema said the plant has been hit by more than 40 inches (102 cm) of rain, was heavily flooded and without electricity since Sunday. Back-up generators have largely been swamped.

Maintaining refrigeration for chemicals that must be stored at low temperature is key, the company said. After losing generators, workers transferred products from the warehouses into diesel-powered refrigerated containers. But the floodwaters also compromised the back-up containers, and the company is monitoring temperature levels remotely, it said.

Harvey, which came ashore in Texas last week as a powerful Category 4 hurricane, has caused catastrophic flooding. The Arkema plant in Crosby produces organic peroxides. It has been closed since Friday but had a skeletal staff of about a dozen in place.

Other Texas chemical plants have also shuttered production because of the storm. Anglo-Swiss chemicals firm Ineos Group Holdings SA [INEOSE.UL] said it has been forced to shut Chocolate Bayou Works and Battleground Manufacturing Complex. INEOS Nitriles’ Green Lake facility are following hurricane procedures and are temporarily shut down, spokesman Charles Saunders said.

Huntsman Corp said it has closed six chemical plants in Texas, along with its global headquarters and advanced technology center in Texas.
MRC

MOSCOW (MRC) -- The research team of Ergon, a brand of the Koblenz-based German company RTI Sports, has developed the new bicycle saddle ST Core Ultra, which features TwinShell technology with an ergonomic core made of the expanded thermoplastic polyurethane (E-TPU) Infinergy from BASF, the world's pretrochemical major, reported GV.

According to the company, this design principle combines optimum pressure distribution and active motion support. Two shells function in isolation from each other in a sandwich construction, held in a floating arrangement by an elastomer damper made of E-TPU. The lower, supporting shell performs a load-bearing function while the upper, flexible seat shell supports the padding. This design principle not only increases comfort but also allows for a new form of pedalling ergonomics, says the manufacturer. As a result of isolating the seat shell from the supporting shell, the saddle follows the natural pedalling movements in all directions. This has the advantage of systematically combining optimised pressure distribution across the sit bones, efficient pedalling ergonomics, good vibration damping, and active back protection.

The ergonomic core of the bicycle saddle is made of Infinergy E-TPU, which is said to set new standards in relation to damping and suspension due to thousands of light and highly elastic foam particles. The high elasticity optimises the damping of pressure in the seat area. As soon as the pressure impulse has passed, the foam springs back into its old shape. The material retains this property even under continuous load. The core thus ensures a direct damping response and high resilience, as well as high durability at low material weight. The E-TPU foam has already been used successfully by leading manufacturers in the safety and running shoe sectors.

Franc Arnold, Ergon founder and chief executive, said: "The idea of a design principle using TwinShell technology and an ergonomic core has been around for a while, but we were never able to find a suitable material on the market to implement this project. Now, Infinergy from BASF has exceeded our expectations. I am absolutely certain that Ergon will cause a stir in the bicycle industry with its ST Core Ultra."

As MRC informed previously, in August 2016, BASF introduced tailored polyamide portfolio for the charge-air duct in modern combustion engines.

BASF is the largest diversified chemical company in the world and is headquartered in Ludwigshafen, Germany. BASF produces a wide range of chemicals, for example solvents, amines, resins, glues, electronic-grade chemicals, industrial gases, basic petrochemicals and inorganic chemicals. The most important customers for this segment are the pharmaceutical, construction, textile and automotive industries.
MRC

MOSCOW (MRC) -- Refiner Thai Oil PCL has bought 1 MMbbl of North Sea Forties crude to be delivered in November to replace more expensive Middle East oil, reported Hydrocarbonprocessing with reference to trade sources.

The delivered price for Forties was lower than that for Abu Dhabi's Murban loading in October, one of the sources said.

The Forties crude deal was unusual as a wide price difference between Brent and Middle East crude Dubai would seem to indicate the Atlantic Basin to Asia arbitrage is not open, traders said.

The seller was likely to be looking for an outlet for North Sea oil that has built up in storage, the sources said.

About 10.8 MMbbl of North Sea crude were stored on ships last week, based on Reuters calculations and trading sources.

It takes about 40 days to ship North Sea crude to Asia.

As MRC informed before, in late March 2017, Thailand's largest oil refiner Thai Oil bought its first ever cargoes of US Eagle Ford crude and Oman crude as its diversifies purchases amid OPEC production cuts.

We also remind that, as MRC wrote before, Russia will not fully scrap its oil export duty until 2022-2025, Finance Minister Anton Siluanov said in mid-March 2017, four years later than previously expected. Russia, the world's biggest oil producer, is in the midst of a so-called "tax manoeuvre" whereby it is gradually increasing its mineral extraction tax (MET), while at the same time cutting export duties on oil and refined products. Previously the finance ministry had considered cutting the oil export duty to zero between 2018 and 2020.
MRC

MOSCOW (MRC) -- US fuel prices surged on Monday as two more Gulf Coast refiners cut output and a third considered reductions, leaving more than 13% of the country's refining capacity offline after Tropical Storm Harvey flooded plants and shut seaports, as per Hydrocarbonprocessing.

The storm swung back over the Gulf of Mexico on Monday and was expected to bring another 10 in to 15 in (25 to 38 cm) of rain to the Houston area and up to 8 in as far east as New Orleans, the National Weather Service said.

Marathon Petroleum Corp's Galveston Bay refinery in Texas City, Texas, cut production by half, sources familiar with plant operations said.

Lyondell Basell Industries' Houston refinery early on Monday also cut output by half to conserve crude supply, other sources said.

Meanwhile the nation's largest plant, Motiva Enterprises' 603-Mbpd Port Arthur, Texas, refinery was considering shutting due to high water on the plant grounds and running with essential personnel only, two sources said.

The profit that refiners make per barrel of gasoline jumped as high as 21% in the first trading day following Harvey's landfall near Corpus Christi, Texas, late on Friday, as fears of short supplies gripped the market.

In total, 2.45 MMbpd of US refining capacity was shut due to Harvey, which knocked out four refineries in South Texas before bringing flooding rains to plants near Houston.

Nearly 19% of oil production in the Gulf of Mexico has been shut, the US Department of the Interior said on Monday.

The latest refining cutbacks were at Marathon's 459 Mbpd plant and Lyondell's 26 Mbpd Houston plant.

Oil prices fell as the refinery closings reduced demand, with US crude futures dropping by more than 3% on Monday.

Among other Gulf Coast refiners, Exxon Mobil's 362.3 Mbpd Beaumont, Texas, refinery has cut production, the company said. It did not provide additional details. Earlier, Exxon halted production at its 560.5 Mbpd Baytown, Texas, plant.

Valero Energy's 335 Mbpd Port Arthur, Texas, refinery is running at or near maximum capacity but contending with flooding in the plant, sources said on Monday. Valero confirmed the plant is running, but has not commented on further.

Total SA's 225.5 Mbpd Port Arthur, Texas, refinery is operating normally, sources said.

In the area where the storm first hit, Citgo Petroleum's refinery in Corpus Christi is preparing to begin its restart process as early as on Wednesday, sources said. A spokesperson did not reply to requests for comment.

Two other refiners who shut plants in the region, Valero and Flint Hills Resources, did not respond to requests for updates on their operations there.
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