Harvey shuts 24% of refining capacity in US; Brent down

WTI Crude Oil

Brent crude traded 54 cents lower at $51.46 a barrel.

SINGAPORE, Aug 30 (Reuters) - Oil prices dipped on Wednesday but gasoline spiked to its highest since mid-2015 as flooding in the wake of Hurricane Harvey knocked out nearly a quarter of USA refineries, crimping demand for crude but raising fears of fuel shortages.

The EIA cited a string of sharp drawdowns in crude stocks over the past eight weeks that helped OPEC's aims of bolstering crude prices, though analysts said much of that could be at stake now with the growth in supply of unrefined oil from hurricane-related outages.

The Gulf of Mexico alone accounts for 20 percent of U.S. oil production, and many rigs were also knocked out by the storm. ExxonMobil Corporation (XOM) and other major refiners have already shut down more than 1 million barrels per day of refining capacity in the region.

US West Texas Intermediate (WTI) crude rose 30 cents, or 0.6 percent, to $46.87 a barrel, after falling more than 2 percent in the previous session. As a result, the discount for U.S. WTI versus Brent surpassed $5 a barrel, its widest in more than two years.

The largest refinery in the United States, Motiva Enterprises' 603,000 barrel-per-day (bpd) plant in Port Arthur, Texas, was shutting down on Tuesday night because of flooding.

Motiva Enterprises chose to close its 603,000bpd plant in Port Arthur, Texas, while Total halved the output of its refinery, which is in the same area.

US gasoline futures jumped 4 percent to settle at 1.7833, the highest in more than two years.

"US gasoline prices increased by 3% at $1.8380 per gallon, the most since 31 July 2015". Some refineries were preparing for restarts, but heavy rains are expected to last through Wednesday, adding to catastrophic flooding in Houston.

Harvey made landfall on Friday as the most powerful hurricane to hit Texas in more than 50 years, resulting in the death of at least 17 people. Jefferies bank said it was lowering its fourth-quarter Brent oil price estimates to $55 a barrel from $60 and its 2018 forecast to $57 from $64.

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