Crude oil prices slip, gasoline futures trade higher

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The region where the storm struck is home to some 2.2 million barrels per day (bpd) of refining capacity as well as being a major shipment point for both imports and exports of crude oil and fuel products. Chicago-area prices are also set to jump because some Gulf Coast refiners send much of their gasoline to the Midwest.

The Gulf accounts for just 15 percent of US oil production, compared with almost 30 percent a decade ago, according to RBC Capital Markets.

Motiva's Port Arthur, Texas refinery has a capacity to process 605,000 barrels of oil a day, according to data compiled by Bloomberg. And restarts are unsafe periods, as fires and explosions can occur. A full 25 percent of all oil and natural gasoline production has been taken offline.

"The effect of Hurricane Harvey has been devastating on the United States", said Sukrit Vijayakar, an analyst with energy consultancy Trifecta.

USA weather services downgraded Harvey to a tropical storm on Saturday. but torrential rains have continued to drown the area and are expected to continue for most of the week. Energy companies are still assessing the damage from Harvey, which was initially a hurricane but has now been downgraded to a tropical storm.

The nation has huge stockpiles of gasoline and oil.

Texas refineries could be offline for up to a month if their storm-drainage pumps become submerged, he said.

While gasoline spiked on the storm, demand for the motor fuel is set to decline over the next several weeks as the USA summer driving season wanes and refineries begin seasonal maintenance, Hansen said.

Peak flooding is not expected until Wednesday or Thursday, jeopardizing the reopening of refineries.

The No. 2 US refinery, ExxonMobil's Baytown, Texas facility, is also offline and has suffered some roof damage. Royal Dutch Shell Plc (LSE: 0LN9.L - news) also halted operations at its 325,700-bpd Deer Park, Texas, refinery.

Further supply disruptions are expected, including at Exxon Mobil Corp.'s XOM, +0.51% Houston-area refinery.

Shares of Valero Energy, Phillips 66 and Marathon Petroleum all closed higher on Monday, on the back of news that several Houston-based refineries had been forced to halt production. Marathon spokesman Jamal Kheiry declined to discuss plant operations.

Port closures in the region continue to spread as well, limiting the ability of refineries that remain open to access crude oil shipments.

The storm barreled into the US Gulf Coast as a Category 4 hurricane on Friday night and has since dumped more than 30 inches of rain on Houston.

The analyst expects draws on gasoline and other refined products and inventories in the near term due to the dramatic reduction in refining capacity.