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On Tuesday, S&P Global Platts said roughly 2.33 million barrels per day of Texas refining capacity remained down, or 12.6% of US capacity.

The U.S. economy expanded at its most robust pace in more than two years in the spring and appears to have momentum going into the second half of the year, supported by solid consumer spending and a pickup in business investment.

Harvey isn't the first big storm to hit the refinery-rich Gulf Coast, but the oil industry has undergone big changes since the last major interruption from Hurricane Ike in 2008.

More refinery closures were expected, as parts of Texas have received more than 4 feet (1.2 meters) of rain. Prices in the region have risen as supply falls because of refinery closures. Explorer Pipeline, which runs from Texas to Chicago, will shut two lines early on Wednesday.

It would've been a much bigger issue a decade ago, when the Gulf accounted for almost 30% of the nation's oil production.

The decision to tap the oil reserve follows the shutdown of the Colonial Pipeline, which normally carries a huge amount of gasoline between Houston and the East Coast.

Buyers for Latin America, where many countries are heavily reliant on US supplies, are trying to buy cargoes.

Gasoline rose still higher post-settlement, after sources told Reuters that Motiva was shuttering the largest US refinery.

"In terms of product price increases, it might get worse before it gets better", said Rob Smith, an IHS Markit energy analyst.

"Brent is still consolidating but the upside will be limited for U.S. benchmark West Texas Intermediate (WTI), simply because 25 percent of the United States refining capacity is shut down".

With that, gasoline futures headed higher for a third straight day.

The storm caused the closure of refineries in the USA oil-producing heartland, which traders fear will lead to bigger crude stockpiles and push down prices. Diesel advanced by 1.7 percent to $1.6944 a gallon, having touched its highest since January 9 at $1.6966.

Retail gas prices climbed, too, up 2 cents a gallon on Wednesday and 7 cents in the past week, to a national average price of $2.42 per gallon, according to Gasbuddy.

Commodities strategists at Bank of America Merrill Lynchworry that it could happen again, with the global benchmark getting dragged down by the impact of Tropical Storm Harvey on USA crude prices.

The plant was already operating at 60% capacity as of Tuesday afternoon and 40% on Tuesday evening. "The slow moving nature of the storm will likely lead to these shut-downs continuing in coming days and may generate persistent damage as well", said the bank's head of energy research, Damien Courvalin.

Exxon has shut its 362,300-bpd Beaumont refinery in east Texas because of high water in the plant, said sources familiar with the plant.


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