LONDON (Reuters) – Oil prices fell on Friday in the aftermath of Hurricane Harvey, which has killed over 40 people and brought record flooding into the oil heartland of Texas, paralysing a quarter of the U.S. refining industry. Harvey, downgraded to a tropical storm and losing steam as it moved inland, shut at least 4.4 million barrels per day (bpd) of refining capacity. That sparked fears of a gas deficit before the Labor Day weekend and reduce refinery demand for crude, widening the spread between U.S. gas RBc1 and crude CLc1. This gas “crack spread” hit a high of $27.79 a barrel on Friday, up $10 in a week. Brent crude LCOc1 for November was down 50 cents at $52.36 a barrel by 0930 GMT. The Brent contract for October, which expired on Thursday, closed up $1.52 at $52.38. U.S. crude was last down 50 cents at $46.73 a barrel. The contract rebounded 2.8 percent on Thursday but is heading to get a weekly decline of around 2 percent. U.S. gas hit a two-year high above $2 a gallon on Thursday, but eased back on Friday. The gas September futures contract settled up 25.52 cents, or 13.5 percent, at $2.1399 on the last day of trading in the contract. Gasoline for October RBc1 opened considerably lower on Friday, at $1.7744 a gallon. “Natural disasters generally are negative over the medium term due to demand destruction, but in the short term the market responds to the shortage of supply,” said Jason Gammel, oil and gas analyst in U.S. investment bank Jefferies. The U.S. government tapped its strategic petroleum reserves for the first time in five years on Thursday, releasing 1 million barrels of crude to a working refinery in Louisiana. An adviser to President Donald Trump told a White House briefing. “We would be very comfortable tapping into that,” homeland security adviser Tom Bossert told reporters. U.S. crude oil stocks fell sharply last week as refineries raised output with the approach of Harvey, the Energy Information Administration said. [EIA/S] The oil market outside America remains well supplied with ample production by the Organization of the Petroleum Exporting Countries. OPEC oil output dropped from a 2017 high by 170,000 bpd in August, a Reuters survey found. Tony Nunan, oil risk director at Mitsubishi Corp, said Harvey was likely to increase oversupply “Production will come back quicker than refining so it’s just going to exacerbate the situation where there is too much oil,” he said. Reporting by Aaron Sheldrick in Tokyo; Editing by Dale HudsonOur Standards:The Thomson Reuters Trust Principles.