More rain and flooding on Tuesday added to the Houston area’s woes as the aftermath of deadly Hurricane Harvey, downgraded to a tropical storm, continued to create destruction across a swath of Texas.

Harvey struck at the heart of the U.S. oil industry over the weekend, leaving at least 10 dead, thousands of residents displaced, and scores injured as the floodwaters rose. The effects of the powerful storm and its floodwaters will likely ripple across the energy sector for weeks to come.

Energy stocks fell on Tuesday to become the third worst-performing sector in the S&P 500 index SPX, -0.03%  as markets were also rattled by North Korea’s missile test over Japan late Monday.

Among energy stocks, refiners continued to be an exception, with shares of Andeavor ANDV, +0.99% formerly known as Tesoro Corp., and Phillips 66 PSX, -0.02%  showing a rare flash of green on traders’ screens.

Refineries in the areas affected by the hurricane will likely be sidelined for weeks, and gasoline futures have spiked. While downtime is a negative for the refining industry, better margins would more than compensate for that.

Hurricane Harvey highlights biggest impact of shale-oil revolution

Analysts at Barclays said that Harvey knocked down about 2 million barrels a day to 3 million barrels a day of refining capacity, citing government and media reports. About 40% of U.S. petrochemical capacity is offline, alongside more than 500,000 barrels a day of oil production and around 1.5 billion cubic feet equivalent of gas production,

Due to the impact of flooding on labor, logistics, and infrastructure, “onshore and offshore production may not bounce back as quickly as the market is initially assuming,” the analyst said in a note Tuesday.

“Moreover, the delayed impact of deferred completions in (South Texas’ Eagle Ford) may dent 4Q production prospects and will likely be supportive of crude and natural gas prices in the months ahead,” they said.

Shares of refiners that operate mostly outside the Southeast jumped more than 7% Monday, but were giving back some of those gains on Tuesday. Delek U.S. Holdings Inc. DK, +0.48% and PBF Energy Inc. PBF, +0.18%  fell less than 1%, while HollyFrontier Corp. HFC, +1.68%  rose less than 1%.

These would be best positioned given the widening crude differentials and their unaffected operations, analysts at Raymond James said in a note earlier in the week.

Read now: Don’t let anyone tell you Hurricane Harvey won’t damage the U.S. economy

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Very informative
05-03 04:23 by Liam
The same day Trump spoke with Reynolds
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