On Monday, the shares of oil refinery companies increased after a Category 4 hurricane, Havey, forced Houston’s refiners to close down.
The hurricane that was later downgraded to a tropical storm devastated Houston and other parts of Texas last weekend, with more than 30 inches of rain falling in various parts of the state in just 48 hours. Houston is a base of several major refineries in the U.S.
“With some of the major refineries closing down in Houston, we’re seeing fireworks in gasoline prices, a move which is being reflected in refinery stocks,” stated chief market economist at First Standard Financial, Peter Cardillo.
On Monday, RBOB gasoline futures for September delivery increased to as much as 6.8 percent prior to trading 4 percent higher at $1.7331 a gallon. Meanwhile, U.S. crude futures for October delivery decreased by 1.5 percent to $47.17 per barrel.
In early trade, shares of Phillips 66, Marathon Petroleum, and Valero Energy all rose to at least 1%.
On Monday, Oil Price Information Service’s global head of energy analysis, Tom Kloza, informed CNBC’s ” Squawk Box “: “We’re looking at a mini-gasoline spike at the prospect of millions of barrels a day of U.S. refining capacity lost for at least a period of days,”
“There are some real questions about what happens when you have an unprecedented forecast of 30-to-60 inches of rain in an area like Houston where many of the refineries sit along the ship channel at very modest numbers above sea level,” said Kloza.
Meanwhile, the broader stock market traded mixed as investors prepare to wrap up in August.
With Travelers adding the most to the losses, the Dow Jones industrial average dropped 17 points. The 30-stock index’s trade was higher earlier in the session.
With health care leading six sectors higher, the S&P 500 gained 0.1 percent. The Nasdaq composite also climbed 0.1 percent.
On Monday’s session, the S&P, Nasdaq, and Dow were all down for the month as investors engage with lingering concerns about the Trump administration’s ability to move forward with the tax reform.
Aftermath the violent protests in Charlottesville, Virginia, President Donald Trump has observed the Republican party’s top members distance themselves from him.
“As we approach September, I think investors are going to be very cautious,” stated First Standard Financial’s Cardillo. “I think the greatest threat to the market right now is the political situation.”