Harvey may succeed where OPEC has struggled by boosting oil prices

As the market wrestles with the fallout from Hurricane Harvey, the storm that that struck the coast of Texas on Friday causing widespread damage and flooding, at least one analyst says the wider picture for oil is for prices to grind higher. That means that no refined products or crude oil will be either imported or exported for the time being.

A loss of USA exports of light crude may stoke demand for similar grades from suppliers such as Angola and Nigeria, while shippers of heavier crudes may have to offer discounts if cargoes headed for the United States have to be diverted.

Meanwhile, Valero, the nation's largest refiner, said it was looking at ways to restart the two refineries it shut down in Corpus Christi.

Harvey forced the shutdown of 10 oil refineries along the Gulf Coast, a US energy hub.

Investors will likely get out of their short positions, according to Andy Lipow, president of consultant Lipow Oil Associates LLC in Houston, said by telephone. The storm is already estimated to have reduced refining capacity in the area by more than 2 million barrels a day, boosting gasoline prices to their highest in more than two years, but adding pressure on US crude.

Nearly 3 million barrels of oil a day can't be refined into gasoline and other products - about 16% of US refining capacity, according to Goldman Sachs. "If (U.S.) refineries shut down for more than a week, Asia will need to run at a higher level, because there's no spare capacity in Europe", Olivier Jakob, managing director of Petromatrix said in an interview with CNBC.

"We are thus lowering our Brent oil price estimates to $55 per barrel from $60 per barrel in 4Q17 (and) to $57 per barrel from $64 per barrel in 2018", Jefferies bank said. Several others were operating at reduced capacity.

Crude markets were also looking at disruptions in Libya and Colombia.

The flooding has also crimped the flow of gasoline and other fuels to the East Coast through a big pipeline.

The Eagle Ford shale basin lies in the path of the storm and producers in the region have idled production.

While much of the offshore crude production in the Gulf of Mexico was shut in ahead of Harvey's passage, the yet to be quantified damage from the storm may lie with the onshore, shale oil output that was in the storm's path.

Analysts at JBC Energy said current disruptions are affecting both demand and supply, making it hard to assess the impact on balances at this point. 25 inches of rain has already dropped in Houston, and another 20 inches is expected.

Vanessa Coleman