Gasoline prices head higher following Hurricane Harvey

Texas is home to 5.6 million barrels of refining capacity per day, and Louisiana has 3.3 million barrels.

"That 10 million (bpd) level is just not going to happen in the next two years at least", said Anas Alhajji, an independent oil analyst and economist. "In contrast, oil prices retreated", ANZ bank said. "We will need to wait for the flood waters to recede in order to assess this", Halley said.

Gasoline for October delivery on Friday fell 1.8 percent to settle at US$1.7479 per gallon on the New York Mercantile Exchange, but was up 4.8 percent for the week.

It returned as a storm to hit Louisiana on Wednesday, forcing the shutdown of the biggest US refinery, owned by Motiva Enterprises LLC in Port Arthur, Texas.

Marathon Petroleum Corp's Galveston Bay Refinery in Texas City, Texas, had raised production to 45 percent of its 459,000 bpd capacity, sources told Reuters. Gasoline prices in the region were $16.34 a barrel, also the highest since January 2016.

Shortages were expected throughout North Texas - a shortfall caused by closed refineries on the Gulf Coast as a result of Hurricane Harvey - and several stations in Cleburne shrouded their pumps as gas ran out.

Light synthetic crude from the oil sands for October delivery strengthened to last trade at $1.70 a barrel over WTI, having settled at $1.30 per barrel over the benchmark on Thursday. That would have been a 14 percent increase, taking USA output to a level not seen since the 1970s.

Gasoline margins RBc1-CLc1 climbed, as the gasoline crack spread jumped to $24.02 a barrel early in the session, the highest on a seasonal basis since 2012.

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Analysts said the storm will likely halt any oil price recovery despite an OPEC-led effort to bolster the market by slashing production until March next year. It has since soared another 30 cents per gallon and AAA said the Southeast in particular could be facing higher prices at least into September.

The Phillips 66 refinery in Lake Charles, Louisiana, will receive crude from the strategic reserve as part of an agreement requiring the company to replace the oil once supplies are flowing again.

The price rise reflected the concentration of so much of the U.S. oil refining industry in the state of Texas where it was hit hard by the record-setting hurricane, Bohanon explained.

After record rains and flooding, the storm's effects will be felt for weeks, possibly months. The Colonial Pipeline announced Wednesday evening it expects to temporarily suspend its gasoline, diesel and jet fuel pipelines.

Energy Secretary Rick Perry said Thursday he is releasing 500,000 barrels of crude oil from an emergency stockpile in a bid to prevent gasoline prices from spiking in the wake of disruptions caused by Harvey.

The Phillips 66 plant was untouched by the storm, which had significantly affected U.S. refinery and production capacity in the Gulf of Mexico.

The market shrugged off weekly inventory figures from the U.S. Energy Department, which reflect stocks prior to the storm. Tankers carrying millions of barrels of fuel have been rerouted to the Americas to avert shortages. Refining capacity utilization rose to 96.6 percent, the highest since 2005, a figure that will fall sharply due to massive shut-ins on the Gulf.

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