jubak on flooded oil mkts

[k1f]

<<The price of oil fell, though, with West Texas Intermediate falling 1.63% on the day. The fear here is that an estimated one-third of refineries are about to go off line because of the storm. And right now the oil market counts, heavily, on those refineries to sop up part of the excess in global supply. If those refineries aren’t running and if they aren’t pumping oil into their storage tanks that just pushes more oil onto global markets that already have more oil than they know what to do with. The storm doesn’t look likely to disrupt production from the inland oil shale regions so producers there will just keep pumping oil onto the market even if the refineries are shut down. Or at least that’s the scenario that worries markets.
For the week ended August 11 refinery utilization hit an all-time high of 17.8 million barrels per day. That dropped only slightly for the week ended on August 18–by a whole 130 barrels a day.
Which does make you wonder where the market is going to put all that refined product. Especially since the summer driving season, with its high demand for gasoline, is coming to an end. From the point of view of the gasoline market–although certainly not that of the workers and residents of the Gulf Coast–Hurricane Harvey comes at a good time since it will cut gasoline supply just at the often tricky industry slow period between high summer demand for gasoline and the peak winter demand for heating fuel.>>

[dan_s]

Crude oil in storage will probably go DOWN over the next few weeks. Many ports where the tankers unload are closed and lots of Texas production is shut in. Imports go down during the peak of hurricane season, which is NOW.

This storm will pass and it is going to take a lot of energy and money to clean this up.

Refineries should all be up again next week.

[dan_s]

From Dan Flynn this morning:

Tropical Storm Harvey could threaten refineries in Galveston, Texas and Louisiana that have 4 refineries alone in Lake Charles, Louisiana and a total of 18 in the state. Flooding is a severe risk so we will monitor the events of Harvey moving back into the Gulf of Mexico moving east-northeast at 3 knots which is a bad sign for Louisiana and the National Hurricane Center cone of Harvey’s movement directly through the state Wednesday and Thursday and hitting Arkansas, Mississippi, and Alabama on Friday. In the overnight electronic session the October Crude Oil is currently trading at 4661, which is 4 tics higher. The trading range has been 4696 to 4639.

On the Natural Gas front the September contract expires today. And so far there has been pretty quiet trade with refineries in Galveston shutting down and talk of getting Houston refineries back online with some pinpointing as early as Wednesday or Thursday. In the overnight electronic session the October Natural Gas is currently trading at 2.966, which is a ½ of a cent higher. The trading range has been 2.975 to 2.934.