Crude oil slid and gasoline futures hit their highest since mid-2015 on Wednesday as flooding and damage from Tropical Storm Harvey shut about a fifth of U.S. refineries, curbing demand for crude while raising the risk of fuel shortages.
Refineries with output of 4.1 million barrels per day (bpd) were offline on Tuesday, representing 23 percent of U.S. production, Goldman Sachs said. Restarting plants even under the best conditions can take a week or more.
"It will be a while before operations can return to normal and the U.S. refining industry is bracing itself for an extended shutdown," Stephen Brennock of oil broker PVM said.
Brent crude futures, the international benchmark for crude trading, was down 55 cents, or 1.1 percent, at $51.45 a barrel by 10:48 a.m. ET (1448 GMT). U.S. West Texas Intermediate crude fell 36 cents to $46.08.
In refined products, price movements were more dramatic. The largest refinery in the United States was shutting because of flooding, sources familiar with operations said.
U.S. gasoline futures rose more than 7 percent above $1.91 a gallon, near the highest level since July 2015, before pulling back to $1.903. Diesel futures advanced by 2 percent to $1.6986 a gallon, having touched their highest since January at $1.7161.
"Crude is always easier to replace than products," said Olivier Jakob, analyst at Petromatrix. "If the refineries stay shut for more than a week or 10 days, it's going to be very problematic."
Harvey made landfall on Friday as the most powerful hurricane to hit Texas in more than 50 years, resulting in the death of at least 17 people.
In addition to shutting oil refineries, about 1.4 million bpd of U.S. crude production has been disrupted, equivalent to 15 percent of total output, Goldman Sachs said.
The impact of the storm overshadowed the latest weekly figures on U.S. oil supplies from the Energy Information Administration.
U.S. commercial crude inventories fell by 5.4 million barrels to a total of 457.8 million barrels in the week through August 25, EIA reported. Analysts had expected a decrease of 1.9 million barrels.
Gasoline stocks rose by 35,000 barrels, compared with analysts' expectations in a Reuters poll for a 1 million barrels drop.
Distillate stockpiles, which include diesel and heating oil, were up by 748,000 barrels, versus expectations for a 846,000 barrels decline, the EIA data showed.
The figures do not reflect the impact from Harvey.
U.S. oil production ticked down by about 12,000 barrels a day to 9.07 million barrels a day, according to preliminary weekly figures.