Oil prices edge lower after Hurricane Harvey rips through Texas

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The flooding has caused extensive damage to Texas' oil industry (Source: Getty)

Crude prices have edged lower this morning as traders take in the devastation caused by Hurricane Harvey in America's top oil producing state.

Production onshore and offshore was halted and around 13 per cent of the country's refining capacity has been shut down due to "catastrophic" flooding in the Houston area.

Motiva Enterprises is currently mulling whether to close its 603,000-barrel-per-day crude oil refinery in Port Arthur, which is the country's largest, Reuters reported. Owned by Royal Dutch Shell and Saudi Aramco, the firm is expected to make a decision on the plant today.

Read more: Hurricane Harvey: damage payouts could be as much as $20bn

Shell has also decided to shut its Deer Park refinery and chemical plant for up to a week due to the impact of flooding.

The oil major's shares fell 1.32 per cent to 2,145p in afternoon trading.

Harvey, which has been downgraded to a tropical storm, may still cause more damage as heavy rains are expected through tomorrow.

Global Brent crude futures were trading 0.85 per cent lower today at $51.45 per barrel.

US West Texas Intermediate futures were held up somewhat by fears over the extent of damage to oilfields or pipelines. Prices were down 0.11 per cent at $46.52 per barrel.

Refinery closures along the coast of the Gulf of Mexico pushed US gasoline futures to peak at a two-year high of $1.7799 per gallon yesterday. The benchmark was trading at $1.7078 today.

Read more: Oil prices climb as Hurricane Harvey makes its way towards Texas

Analysts at Julius Baer said the storm-related damage seems "managable". They said:

Energy markets are pondering the impact of hurricane Harvey, which hit the heartland of the US energy business over the weekend.

Historically, storm-related prices moves have been temporary and short-lived. According to initial estimates, Harvey fits the average hurricane impact suggesting that distortions should disappear within two or three weeks, although the floods remain a wild card.

Prices will only see a more lasting impact if trade disruptions are more severe, analysts said.

The hurricane is set to cost the US insurance industry as much as $20bn (£15.5bn), making it one of the biggest payouts in American history alongside Hurricane Katrina, according to JP Morgan.

Tags: Oil prices