Oil and chemical facilities located along the Texas and Louisiana Gulf Coast are shuttering, securing equipment or running through emergency protocols ahead of a strong hurricane set to rip through the region this week. Some of the largest U.S. refineries are winding down in advance of Laura, which could become a major hurricane before landfall, potentially shutting in more than 1 million barrels a day of capacity. Another storm, Marco, had been heading in a similar path, but has lost power and will likely skirt the shoreline later this week.
Oil and gasoline prices rallied on the disruptions, as fears that the shuttering of the key refineries would mean less availability for oil products. Gasoline futures settled 6.5% higher on the day, the biggest one-day climb since May. Meanwhile, the the spread between the prompt and second-month contracts, a closely watched indicator for supply and demand, rallied by as much as 58.8%.
Motiva Enterprises LLC is shutting both its 607,000 barrel-a-day oil refinery and chemical plant in Port Arthur, Texas, according to people familiar with the matter and a regulatory filing. Valero Energy Corp. is also shutting its 335,000 barrel-a-day Port Arthur facility, according to people familiar with the operations. Oil major Total SE is cutting crude runs by more than 50% at its 225,500 barrel-a-day refinery there. Port Arthur Mayor Thurman Bartie plans to a issue a mandatory evacuation for the city beginning at 6 a.m. local time, according to a a Beaumont TV station tweet.