U.S. crude oil futures fell on Monday but gasoline prices surged to 2-year highs as Tropical Storm Harvey kept hammering the U.S. Gulf Coast, knocking out several refineries, which backed up crude supplies and disrupted fuel production, Reuters reported.
The U.S. dollar dropped to its lowest in roughly 16 months against a basket of major currencies and a more than 2-1/2-year low against the euro, following comments from central bankers on Friday and worries over the storm hurting the U.S. economy.
Harvey made landfall in Texas late on Friday as the most powerful hurricane to hit the region in more than 50 years and caused large-scale flooding, forcing refineries in the area to close.
U.S. crude futures fell as the refinery shutdowns could reduce demand for American crude.
“The reduced inputs to those Gulf refineries will result in an increase in crude inventories,” said Tony Headrick, energy market analyst at CHS Hedging.
“That outweighs the outages in crude oil production from the storm.”
U.S. crude settled down $1.30, or 2.7 percent, at $46.57 a barrel.
The refinery shutdowns sent U.S. gasoline prices soaring. Spot prices for U.S. gasoline futures surged 7 percent to a peak of $1.7799 per gallon, before easing to $1.7233.
In the U.S. equity market, energy and bank shares weighed on the Dow and the S&P 500.
“There tends to be initially a knee-jerk reaction and people react to the human side and the energy disruption but that eases soon,” said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.