Corpus Christi, Texas, plants close to where Harvey originally hit landfall as a Level 4 Hurricane are now preparing for restart. Shipbrokers said flows to NY will be the highest since November, when a pipeline blast curbed inflows from the Gulf of Mexico.
In the refined product market, price movements are more dramatic.
A firm that does forecasts for insurance companies expects wind-damage claims in the low billions of dollars, and possibly reaching as high as $6 billion.
While gasoline spiked on the storm, demand for the motor fuel is set to decline over the next several weeks as the US summer driving season wanes and refineries begin seasonal maintenance, Hansen said.
Numerous tankers booked for cross-Atlantic voyages have multiple options for where to take their cargoes. The last time shipments were higher was in early November a year ago, after an explosion and fire curbed flows through the Colonial pipeline to Greensboro, N.C., from the Gulf Coast.
“Last week was a week unlike any other in terms of stress to fuel distribution network. peak month of gasoline demand (August) plus high demand for the eclipse plus the devastation in Gulf Coast and it’s a real challenge on the system”, Lenard said. On a seasonal basis, they’re the highest ever. That’s at a time when the outright price of crude itself is still trading at less than half of where it was in mid-2014.
The refining capacity that has been idled because of the storm is about 11.2 percent of the US total, and the immediate impact is being felt in gasoline prices. The refineries’ estimated capacities are over 700,000 barrels per day.
“Hence, the negative impact on crude oil demand and oil product supply might be less severe than feared”.
Louisiana is home to about 3.3 million barrels of daily capacity; Texas has about 5.6 million barrels.
The International Energy Agency’s 29 member countries also store petroleum, which can be made available in case of a supply disruption. “It depends on how long the refinery closures will remain in place”. If it fails as support then look for a break to $44.01.
Citgo’s 425,0000-bpd Lake Charles, Louisiana, refinery has reduced production because of crude oil shipping disruptions, Energy News Today reported on Monday.
“If we saw a sizable release from the SPR, you would probably see the market come under pressure, but 500,000 barrels, while it could help that refinery, I’m not sure that’s having much of an effect on the market”, McGillian said by telephone. Although it remains to be seen whether or not there has been any long-term damage to refineries or production facilities from the storm, some refineries have already said that they hope to be up and running again very soon. “We could see Europe looking more towards Asia to meet any shortfall from the U.S”.
A loss of USA exports of light crude may stoke demand for similar grades from suppliers such as Angola and Nigeria, while shippers of heavier crudes may have to offer discounts if cargoes headed for the United States have to be diverted.