Hurricane Ida Slams Louisiana
August 30, 2021
Hurricane Ida hit Louisiana with record-tying winds speeds of 150 miles per hour. New Orleans lost power and the storm surge caused the Mississippi River to reverse as massive amounts of seawater were forced ashore. The market’s initial reaction when Sunday night trading opened up was higher. Gasoline futures opened ten cents per gallon high but have pulled back and are currently up to four cents per gallon. The market now has to wait and see how the damage assessments go. What is the impact to energy infrastructure? Are refineries impacted? It appears that the Gulf of Mexico oil production came out OK and there are some reports of wells coming back to production relatively soon. On all of these fronts, the market will learn more over the next few days.
The Colonial Pipeline shut lines one and two as a precaution and how and when these lines get put back into service will impact the concerns about gasoline supplies.
The other big news is the OPEC+ meeting which takes place on Wednesday and the sentiment has been that they will go ahead and move forward with their current plan to add an additional 400,000 BPD of production each month through the end of the year. The Kuwaiti Oil Minister added a little bullish fire to the markets as he commented that, ”The markets are slowing. Since COVID-19 has begun its fourth wave in some areas, we must be careful and reconsider this increase. There may be a halt to the 400,000 BPD increase.” This is probably just a statement of concern, but the market expects no changes currently from OPEC+.
Fed Chair, Jerome Powell was dovish in his remarks on Friday at Jackson Hole, and it seemed that he was suggesting tapering would begin by the end of the year.
The Baker Hughes Rig Report had oil rigs up 5 to 405 rigs.