Oil prices rise as refineries shut down ahead of Hurricane Harvey

The oil industry was bracing for the impact of Hurricane Harvey on Friday as refineries and offshore oil platforms on the Gulf of Mexico shut down to prepare for the biggest storm to hit the United States in more than a decade.

Hurricane Harvey is set to make landfall at some point Friday evening or Saturday morning, and while it's relatively slow moving, it has already been upgraded to Category 2 status, with wind speeds in excess of 200 km/h. It is expected to be upgraded to a Category 3 storm in the next few hours, which would make it the most powerful storm to hit the United States since Hurricane Wilma in 2005.

• Hurricane Harvey strengthens and threatens the U.S. with biggest wallop since 2005

The National Hurricane Center is advising millions of people in the area to evacuate if possible or seek shelter, and the oil industry is heeding that advice. Almost a fifth of the U.S.`s oil output, and almost half of its refineries are located in and around the Gulf coast.

Refineries that consume up to five million barrels of oil a day are in the storm's path, which is why many have already started shutting down as a precaution. They include large ones operated by Citgo Petroleum, Valero Energy Corp. and Flint Hills Resources, moving hundreds of thousands of barrels of production offline.

Oil prices rose Friday in response to the sudden lack of supply, gaining 44 cents to settle at $47.87. 

"It will probably disrupt imports into the Gulf Coast which we are already starting to see a little bit of that," said Randy Ollenberger, managing director at BMO Capital Markets, in an interview with CBC News.

Less oil coming into refineries would mean that existing stocks would have to be tapped into to keep them running, which would push prices up a tad.

"Inventory drawing down would result  in a bit of strength in oild prices," Ollenberger said, "but just short term."

Gasoline prices could see a similar surge, but only in patches.

"It would be pretty localized," Ollenberger said. "I don't think the market would get that fussed."