U.S. gasoline futures rose after Hurricane Ida made landfall in Louisiana, disrupting processing facilities and threatening oil rigs.
Gasoline prices for October rose more than 4% in New York before paring the advance, while West Texas Intermediate crude oil fell around 1%. Last week, oil prices rallied 10% higher as investors bet that global demand would recover from the setback posed by the spread of the Delta COVID-19 variant.
Oil reversed gains early Monday (August 30) as local rigs seemed to escape significant damage and the OPEC+ cartel is expected to endorse a supply increase when it meets later this week.
Both crude oil and gasoline have been hit by volatile trading this month as investors weighed the challenge to consumption posed by the resurgence of the pandemic. This week, traders will focus on the fall-out from Ida, as well as the likelihood that the Organization of Petroleum Exporting Countries (OPEC) will increase its output.
Gulf of Mexico producers shut in more than 1.7 million barrels a day of crude output -- about 15% of the total for the U.S. -- ahead of Hurricane Ida coming ashore.
The September gasoline contracts, which expire on August 31, gained 1.7% to $2.3133 U.S. a gallon on the New York Mercantile Exchange. October gasoline prices were up 1.5% to $2.1511 U.S.
West Texas Intermediate crude oil for October delivery eased 0.9% to $68.14 U.S. a barrel.
Brent crude for October settlement fell 0.4% to $72.41 U.S. a barrel.
Refiners shut about 12% of U.S. oil-processing capacity as a precaution ahead of Hurricane Ida, which has stronger winds than Katrina did back in 2005. Colonial Pipeline Co., the operator of the largest fuel-distribution system across the eastern U.S., idled its main network ahead of the storm.
