Almost all global markets seem to be transfixed on Hurricane Irma, which could wallop Florida with an unprecedented and merciless blow and have an impact on many lives as well in the U.S. and global economy. Fox News reported that France’s interior minister on Thursday said the Category 5 storm killed at least eight and injured 23 on St. Martin. Irma blacked out much of Puerto Rico and is headed toward Haiti and the Dominican Republic.
The U.S. refineries are coming back and believe it or not, so is oil production and gas production. Last week Valero Energy restarted two Galveston refineries and are now back to normal production rates. Yet, just as the industry starts to recover, more storms are going to create havoc.
A shut down of the Colonial Pipeline in addition to the Explorer Pipeline and an explosion at a chemical plant is adding to the heartbreaking human suffering that is being experienced along out nations Gulf Coast.
For the U.S. energy industry, the relentless nature of this storm provides challenges unlike anything they have seen before. Despite almost insurmountable logistical challenges, the U.S. energy industry was already making amazing steps to try to start bringing refineries back on line. Yet will their efforts be thwarted as Tropical Storm Harvey gets ready for another go around and will the storms force the shutdown of the country’s largest refinery and shut down even more production.
The Gulf Coast and Houston are in our prayers as they face unprecedented challenges in the aftermath of Hurricane Harvey. Hurricane Harvey, the strongest Texas hurricane in 50 years, brought record rainfall and unprecedented flooding. It may take years for the area to recover and it is going to be a historic challenge for the U.S. energy sector. The storm has shut about 15% of U.S. refining, cutting fuel-making capacity output by an estimated 2.2-2.7 million barrels a day.
Crude oil prices sold off ahead of expiration as traders had their eyes on the skies and not their trading screens. Oil was eclipsed on a day where stock market volumes dried up and it seemed that traders ran for cover ahead of expiration. OPEC punted at their technical meeting and put off a decision to extend until their November meeting.
The crude oil trade has been totally eclipsed by the focus on the so-called glut of crude even as the oil market, due to massive supply withdrawals, is the tightest it’s been in years when you compare it to record demand. The forward demand cover on oil supply in the United States has fallen to 26.7 days of supply, which is the lowest since Oct. 2, 2015.
Crude oil prices were a dog yesterday as the summer doldrums and rising U.S. oil production failed to inspire the market despite another near record crude oil draw. The market also fell on a report that the United States will sell more oil out of the Strategic Petroleum Reserve. Shale hopes may run high as we get into shoulder season yet the drop in oil inventory will start to become a concern as soon as the normal players start paying attention to massive crude drawdowns and near record global demand.
Crude oil is lower as the market has a lot to watch as the seasonal summer peak demand time is here. Seasonal wekness in August seems to be overshadowing a jammed packed oil news day. OPEC meets about compliance as the U.S. oil rig count slows. Storms in the Atlantic could impact shipping and Mexican oil production. Gas Buddy reports retail gas prices hit an eight-week high as the Venezuelan military puts down a coup.