Front-month NYMEX RBOB and heating oil crack spreads against NYMEX light sweet crude skyrocketed to two-year highs during mid-morning trade in Asia Monday, extending Friday’s rise, amid concerns over Hurricane Harvey’s impact on US Gulf Coast refining activity.

Related video:Asian gasoline market assessing Hurricane Harvey’s impact on supply

NYMEX RBOB crack spread against NYMEX light sweet stood at $26.39/b as of 0334 GMT, while the NYMEX heating oil crack spread was at $21.87/b.

Both were at highs not seen since August 2015.

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Crude oil futures though, were mixed.

At 0334 GMT, ICE October Brent crude futures rose 21 cents/b (0.4%) from Friday’s settle to $52.62/b, while the NYMEX October light sweet crude contract was down 16 cents/b (0.33%) at $47.71/b.

After battering the coast and shutting some US refineries when it made landfall at Corpus Christi, Texas, late last week, Hurricane Harvey has now weakened to a tropical storm, the US National Hurricane Centre said Sunday.

Roughly 2.2 million b/d of capacity were currently down or being brought down. Corpus Christi area refineries were already shut ahead of the storm, and Houston area refineries Sunday were being taken down because of flooding.

“In terms of the global petroleum market, we see the impact as more of a passing ripple rather than a reason to revise the intermediate-term outlook for supply, demand, or prices,” said Citi Futures energy futures specialist Tim Evans.

The spread between front-month ICE Brent and NYMEX light sweet has continued to widen. As of 0334 GMT, front-month ICE Brent stood at a premium of $4.91/b over NYMEX light sweet, up 37 cents/b from Friday’s settle.

Analysts pointed to greater demand for Brent crude as a possible reason for the divergence, with OPEC-led cuts and supply disruptions in Libya’s Sharara field pushing end-users towards Brent as an alternative.

The ICE Brent forward curve remained backwardated at the prompt, while the NYMEX light sweet forward curve was mostly in a contango.

“OPEC’s reduced shipments to Asian consumers are driving up demand for North Sea oil,” said Commerzbank analysts in a note last week.

Separately, a weaker dollar lent some support to crude prices.

The US dollar index had earlier plummeted by close to 1% at Friday’s close on a sharply stronger euro, after European Central Bank President Mario Draghi refrained from commenting on the Eurozone monetary policy or the strengthening euro.

US Federal Reserve chair Janet Yellen added further fuel to the fire at the annual Jackson Hole symposium, where she refrained from giving cues on the Fed’s interest rate guidance or plans to scale down its balance sheet.

“Fed chair Yellen’s lack of discussion on both interest rates and the balance sheet had been broadly perceived as retaining a dovish outlook, sending the US dollar plummeting,” said IG market strategist Pan Jingyi.

As of 0334 GMT Monday, the US dollar index was down 0.01% at 92.45.

–Andrew Toh, andrew.toh@spglobal.com
–Edited by Irene Tang, irene.tang@spglobal.com

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