Investing.com – Crude futures settled higher on Tuesday, as Gulf Coast refineries began restarting operations, following the disruptions caused by Hurricane Harvey last week.
On the New York Mercantile Exchange crude futures for October delivery rose 2.9% to settle at $48.66 a barrel, while on London's Intercontinental Exchange, Brent added 1.70% to trade at $53.24 a barrel.
Oil prices continued to pare losses sustained last week, after oil refineries, pipelines and transportation routes across Texas and Louisiana began restarting operation, improving U.S. refinery capacity, after flooding due to Hurricane Harvey shut down nearly a quarter of refinery capacity last week.
About 2 million barrels a day, or 11% of U.S. refining capacity, remained offline on Monday, according to Commerzbank.
The largest U.S. refineries at Port Arthur, however, are not expected to return to normal capacity for at least four weeks, according to Andy Lipow, president of Lipow Oil Associates.
Crude oil’s strong start to the week could come under pressure, however, as analysts expect the Energy Information Agency’s report on crude inventories due Thursday to show an uptick in crude supplies following the lower demand from refiners last week.
Meanwhile, another hurricane - Irma - strengthened on Tuesday into a Category 5 hurricane – the most powerful storm on the Saffir-Simpson scale – with sustained winds of over 157 miles (253 km) per hour, fuelling concerns that the storm could veer into U.S. oil and gas platforms in the gulf.
"The expected path [of Hurricane Irma] has shifted considerably west over the last two days and can still change over the next two," said Olivier Jakob, founder of energy consultant Petromatrix GmbH in Zug, Switzerland. “We cannot yet rule out a move further west with a Louisiana risk.”