FX.co ★ Hurricane season in the US could shut down refineries and drive up oil prices

Oil prices were little changed today after the US Energy Information Administration reported a 2 million rise in inventories last week. It was the same as the 2 million increase over the previous week.

WTI traded at $115.

Meanwhile, gasoline inventories fell by 700,000 barrels last week, compared to a 800,000 barrel decline the previous week. Production averaged 10 million barrels a day, almost unchanged from a week earlier.

Middle distillate inventories, on the other hand, rose by 700,000 barrels, and production averaged 4.9 million barrels per day. The numbers were slightly lower than the previous week's data, which were 2.6 million bpd increase in inventories and 5 million bpd production.

Retail fuel prices remain at an all-time high, with the national average per gallon of regular gasoline surpassing $5 for the first time this month. Refineries are operating at higher-than-usual capacity, at 93.7% last week, up from 94.2% a week earlier.

But there are now growing concerns that the hurricane season could be devastating to fuel prices. The possibility is very distressing because refineries are still grappling with the lingering effects of the lockdown. Processors are still having a difficult time ramping up production as fast as demand grows, which contributes to fundamental imbalances that lead to higher prices. In fact, analysts at Wood Mackenzie said that the oil market will remain tight for another couple of years, which means that prices will remain high, although a sharper increase is unlikely.