Oil prices rose Friday as traders reassessed Hurricane Harvey potential impact on production as the massive storm intensified in the Gulf of Mexico and closed in on the Texas coastline.
West Texas Crude futures for delivery in October rose 0.76% to trade at $47.79 early Friday, Aug. 25, reversing a decline on Thursday that came despite meteorologist warning that the storm would do significant damage to coastal regions. International benchmark Brent Crude futures for delivery in October climbed 0.81% to $52.46.
The Gulf of Mexico accounts for about 17% of the U.S.'s total crude production, while the coastline between Corpus Christi, Texas and Lake Charles in Louisiana is home to about a third of the national oil and gas refining capacity.
The storm, which is expected to make landfall near Corpus Christi late Friday or early Saturday, was upgraded to a Category 2 hurricane on Friday by the U.S. National Hurricane Center. The storm remains on track for a further upgrade and could be the first Category 3 hurricane to make landfall in the U.S. since hurricane Wilma hit Florida in October 2005.
"Harvey is forecast to bring torrential rains and dangerous storm surge that have the potential to create a life-threatening flooding situation starting Friday," warned the National Hurricane Center. Coastal regions can expect up to 35 inches of rain, winds of up to 125 miles per hour and a storm surge that could raise sea levels by as much as 12 feet.
The Gulf of Mexico, where Harvey is gaining strength in warm ocean waters, is home to 5% of U.S. natural gas production, 17% of U.S. crude oil production and over 45% of the U.S.'s total petroleum refining capacity, according to Energy Information Administration data.
These Are the Storm Related Stocks to Watch on Friday
On Thursday, Royal Dutch Shell (RDS.A - Get Report) shut down its Perdido floating oil platform in the Gulf of Mexico and Exxon Mobil (XOM - Get Report) reduced production flow to its Gulf platforms in preparation for Harvey. Anadarko Petroleum (APC) has pulled some workers from its Gulf refineries, as well.
The Houston ship channel has been closed for incoming vessels, meaning crude tankers aren't heading into the port from the Gulf.
Insurance companies could face an onslaught of claims following the storm. Policyholder-owned State Farm Mutual Automobile Insurance Co dominates the market in Texas, followed by Allstate Corp (ALL - Get Report) , Farmers Insurance and United Services Automobile Association, according to data from A.M. Best Co.
Generator manufacturer Generac Holdings Inc (GNRC - Get Report) shares shot up 3.7% late Thursday on speculation people would run out to buy generators. Home product retailers Home Depot (HD - Get Report) and Lowe's (LOW - Get Report) shares are also in focus. Lowe's has more than 140 stores in Texas, while Home Depot weighs in with 180.
A post shared by ❤��Tara���� (@tara.will.melt) on
A post shared by ��Aleicia O'Neal�� (@forever_sweetz) on
More of What's Trending on TheStreet:
- 10 Mind-Blowing Things That Amazon Might Do to Whole Foods
- Sears Is Closing a Ton More Stores Because Let's Face It, It's Sears
- Here Are 3 Things to Do After a $750 Million Powerball Win
- Gibson Guitar May Default If Company Can't Refinance Its Debt
- Wells Fargo Is in a Correction -- This Is What You Should Do