Canadian pump prices are expected to ease back to pre-Hurricane Harvey amounts in the coming months, as U.S. Gulf Coast refineries gradually restart operations and restore supply to the North American marketplace.
Since Hurricane Irma headed toward Florida and two other storms roiled from the Atlantic Ocean and Gulf of Mexico, analysts saw little danger to the oil supply chain that was seriously disrupted when Harvey slammed into Texas’s massive refining centre.
“We’ve seen both retail and wholesale costs come off the spike and I hope that trend will continue for a little while,” said Michael Ervin, vice-president in the Kent Group Ltd., which tracks oil markets.
In its everyday poll, Kent reported that Canadian pump prices averaged $1.24 a litre on Friday, down from a weekday peak of $1.27 on Wednesday. The company failed to conduct polls on the Labour Day weekend, when prices increased well over $1.30 in several Ontario markets. The national average on Friday was still 13 cents above costs that existed before the hurricane-fueled increase.
Tom Kloza, head of Oil Price Information Service in Maryland, said he expects prices to decline to pre-hurricane levels by the beginning of fall on Sept. 22.
He said Harvey hit as North American gasoline consumption was peaking heading in the Labour Day weekend, with August representing a record month for demand in america.
But, ingestion typically falls off as summer ends, so there’ll be less pressure in the marketplace. As well, several refineries which were likely to shut down for maintenance remain in operation to be able to make the most of the fat profit margins that refiners are getting in the temporary disruption.
While gas and diesel demand in Florida spiked as residents prepared for the onslaught of Irma, a Category 4 hurricane, the final result will be a decrease in demand as businesses close and people hunker down, either at home or in evacuation places, to riding the storm out, Mr. Kloza said.
Petrol and gas markets across the USA and Canada were hit by the reduction of distribution when a quarter of the American refining capacity went offline during the storm. A lot of these facilities have either resumed or have started that process, which requires several days to finish. But some companies are still assessing the damage at their refineries, particularly those around Port Arthur, Texas, near the Louisiana border, which experienced heavy flooding when Harvey came ashore.
At one stage, 3.7 million barrels per day of refining — or about a quarter of U.S. capability — was offline, Dylan White, an analyst at Genscape Inc., said. That is now down to 3 million barrels per day of capacity from action, a figure which will fall rapidly now that lots of businesses are in startup mode.
At exactly the exact same time, markets in the U.S. Northeast were deprived of distribution when the Colonial Pipeline — that carries gas from the Gulf Coast — has been closed down. Because of this, retailers and retailers throughout eastern North America confronted a supply shortage that pushed prices higher.
Mr. Ervin noted that spikes were greatest in Central and Eastern Canada, while the Prairies saw about half of the growth which cities in Ontario and Quebec experienced. Vancouver — which already has the maximum gas prices in Canada — saw virtually no impact from the hurricane.