(Reuters) - Goldman Sachs analysts say gasoline and distillate product refining margins are likely to rise further in the wake of Tropical Storm Harvey, which is expected to drop more than 50 inches of rain in parts of Texas throughout the week.
More than 2 million barrels of refining capacity has been shut in already as a result of the storm, and it will take days to weeks for refiners to fully return. The storm hit as a Category 4 Hurricane over the weekend.
Using past hurricanes as a guide, Goldman estimated the storm would increase domestic crude oil availability by about 1.4 million barrels a day - because of refinery shut-ins. However, it would cut gasoline supplies by 615,000 to 785,000 bpd and reduce distillate supplies by 700,000 bpd.
“Larger refinery outages would increase these long crude and short product impacts,” they wrote. “The loss of (U.S. Gulf Coast) refining capacity will further support refinery margins for non-affected refiners to incentivize them to operate at higher utilization.”
Reporting by David Gaffen, editing by Louise Heavens