Large Portions of Louisiana Remain Without Power
September 1, 2021
The Bloomberg estimates for today’s DOE inventory report are for crude supplies to be down 2.750 million barrels. Gasoline supplies are estimated to be down 967,000 barrels and distillates are estimated down 467,000 barrels.
The API data released yesterday afternoon called crude stocks down 4 million barrels, gasoline stocks up 2.7 million and distillates down 2 million. Crude oil stocks at Cushing, Ok were up 2.128 million barrels.
The damage assessment for energy assets has been very mixed as the reports are limited. It appears there has been a fair amount of flooding and no electrical power. Louisiana still has a large percentage of the state with no electricity. Refineries are high on the list to restore power, but it appears right now that this will be a challenge and take more than a week as opposed to a few days.
Refineries being down has two impacts. One is they do not take in crude oil so crude stocks could build in the near term. The other is that outputs of gasoline and diesel do not get produced so stocks could decline. But you also have to consider the demand destruction caused by the hurricane. As is the usual case there being many factors that will impact the direction of energy prices going forward. With so much uncertainty right now, the market will likely congest and buy time.
OPEC+ is meeting today and the market right now is of the opinion that they stick with their current plan. OPEC+ is still calling for demand to increased and they still see there is a supply deficit into the end of the year even with their additional barrels. if OPEC+ does make a change to not increase their barrels to the market it should support the market.
The estimates for today’s propane inventory report are for there to be a build to supplies of 1.37 million barrels. The five-year average for this reporting week is a build of 3.536 million barrels. The propane market is still trying to get to a more “normal” level of stocks prior to the winter season. The market basically has the rest of this month to achieve that goal. With the estimate for today’s number and what the market has seen in the last several weeks, it is going to be a challenge to get there.