Here we go again. Gasoline prices are up more than 3 cents this morning on news that Tropical Storm Nate is likely to make landfall in the US as a hurricane Sunday, and the New Orleans area – home to the largest refining hub outside of Texas – is now in the forecast cone.
At this point, the storm seems to be steering east of the 1.6 million barrels/day of refining capacity around New Orleans, but the Chevron Pascagoula (370mb/day) and Shell Saraland (95mb/day) plants look to be in the current path. There was a notable shift west in the forecast overnight however, and if that happens again, it will put more refineries and off-shore production at risk.
While uncertainty in these forecasts is to be expected, one thing the models are agreeing on is that this storm should not get close to the strength of Harvy, Irma, Jose or Maria, so unless it makes a direct hit on a coastal refinery, the impacts on prices “should” be short-lived.
Notable Items from the DOE report:
PADD 1 refinery runs dropped sharply on the week, proving the stories that rough seas caused by Hurricanes Jose and Maria interfered with crude oil deliveries in the past couple of weeks. With conditions along the East Coast back to normal, we should see those run rates bounce back next week.
The recovery in PADD 3 refinery runs seemed to have stalled out last week, with only a small increase, suggesting that the Pt. Arthur-area facilities may be taking longer than expected to get back up to speed. There were also multiple fires reported at plants initiating restart that likely contributed to the small increase.
Crude oil inventories dropped sharply as US exports of crude reached a record high just under 2 million barrels/day.
The latest on TS Nate from the EIA’s energy disruption map.