Hurricane Laura Slams Louisiana
August 27, 2020
Crude oil and refined fuels products closed lower yesterday due to investors taking products after the market rallied up to 5 months highs. Also helping the market to trade lower was the pandemic causing lower demand, and potential for lower oil demand and power demand due to Hurricane Laura hitting Texas and Louisiana, as well as, refinery shutdowns which has caused then to not be using crude right now also added some selling pressure.
Hurricane Laura hit land in Louisiana with the highest winds speeds for a hurricane that has every hit southwest Louisiana. The market is down currently as we wait to see the impact the storm has made as it made landfall at around 2 am. The market will now wait to see what damage has been done to refineries and transportation infrastructure.
The market was a bit confusing yesterday as Hurricane Laura was heading for landfall and prices were trading lower. It appears that traders and the funds took some profits as energy traded near 5 month highs.
Here are the DOE inventory numbers from yesterday. Crude stocks were down 4.69 million barrels and if you include the withdraws from the SPR stocks were down 6.45 million barrels. Gasoline stocks were down 4.58 million barrels. Distillates stock up 1.39 million barrels.
Propane stocks built by 1.538 million barrels putting total stocks at 90.833 million barrels. Midwest stocks were up 444,000 barrels and Gulf Coast stocks were up 36,000 barrels. Exports were down 222,000 barrels and demand was up 109,000 barrels, and production was up 66,000 barrels at 2.270 million barrels. Total stocks are 792,000 barrels more than last year at this time. Total Midwest stocks at 25.256 million barrels and that is 867,000 less than last year. Gulf stocks are at 52.286 million barrels which is 77,000 less than last year at this time but we are still at high levels.
I still see good inventory levels, but many others do not, and I guess it is all a matter of your perspective. Total crude stocks are at 507.763 million barrels 80.012 million more than last year. Total gasoline stocks are 239.179 million barrels which is 7.197 million more than last year. Distillate stocks are at 179.195 million barrels and last year there were 136.060 which is 43.135 million barrels more. That again seems like an excess of inventory as I look at it. But other are more focused on increasing demand and lower production and are concerned with supplies getting tighter. Here is an example of how others see the situation from John Kemp a Reuters reporter. US petroleum inventories declined almost 10 million barrels last week and are now down 32 million barrels over the last five weeks.
Gasoline demand was good as it came in at 9.2 million bpd the highest level seen all summer. But the 4-week rolling average is 9.8% lower than last year’s 4-week average.
The US Department of Energy said it is ready to draw down crude oil from the Strategic Petroleum Reserve if President Donald Trump determines the oil would help refineries deal with any damage caused by Hurricane Laura along the Texas and Louisiana coasts.