Energy Prospectus

The big spread between Brent and WTI has been caused by the impact of Hurricane Harvey. Damage to Gulf Coast refiners (~30% capacity taken out by flooding) has lowered U.S. demand for WTI. It should ramp back up to 17.5 million barrels per day by the end of October. U.S. refiners will need to stay at higher than normal (for this time of year) throughput rates to restore depleted refined product inventories. I expect large draws from U.S. crude oil inventories during Q4.

The big spread (~$6/bbl) also:
> Lowers U.S. imports of crude oil because tankers with an option (not many) will take their oil to European ports to get the higher price.
> Increases demand for WTI abroad. For the week ending 9/15/2017, the U.S. exported 928,000 barrels per day of crude oil. Most it goes out of Corpus Christi and Houston. I expect exports to increase to take advantage of the higher prices in Europe. Mexico and South American refiners also need U.S. oil.
> Increases demand for U.S. refined gasoline and diesel. Many countries depend on fuel supplies from the U.S.

Phil Flynn 9/27/2017 at 8:47AM ET (before EIA weekly report)

"Despite a crazy year filled with hurricanes and bad data on supply and demand we have kept our long term bullish outlook on oil all year. As oil looks to test the 2017 highs a break above that area ($52.50) should set the stage for a test of $60. Our long term bullish option strategies are starting to pay off and the biggest concern we have is that NYMEX WTI futures are getting overbought and funds are heavy long. We have never bought into the lower for longer arguments and we still feel that the low that WTI set last year was a generational bottom and the rebalancing of the market is well underway."

Phil's full article is here: https://www.investing.com/analysis/the- ... -200215654

U.S. crude exports to Asia may shake up global oil pricing. Reuters.

The great disruptor that is U.S. shale oil is coming to Asia, as refiners in the energy-hungry region look to expand and diversify their sources of crude, and the consequences will likely go well beyond a shift in oil trade flows. It should come as no surprise that rising oil output in the United States would find its way to the region that is the world’s fastest-growing consumer of the fuel, but perhaps the rapid pace of the shift has caught some in the market off-guard. Crude oil exports to Asia from the United States are still relatively small-scale, with Thomson Reuters Oil Research and Forecasts estimating flows of around 261,000 barrels per day (bpd) in the first eight months of the year. However, this is about 10 times what they were in the same period last year. Major buyer China has gone from taking just one cargo of under 1 million barrels in the January-August period in 2016 to buying about 115,000 bpd from the United States so far this year.