There are 3 hurricanes spinning in the Atlantic basin this morning, less than a week after Harvey finally moved away from the Gulf Coast. The good news for energy markets is that none of these systems looks to be a threat to the beleaguered Gulf Coast refining & pipeline network. Irma still appears headed for Florida and the Carolinas, with the latest models reducing the likelihood of the system getting into the Gulf of Mexico. Jose meanwhile looks like it will spin in the Atlantic without coming onshore at all, while Katia should move onshore in southern Mexico in the next few days.
Florida is now witnessing the rush of demand that Texas saw 2 weeks ago as people rush to prepare and/or evacuate ahead of the storm. Reports suggest that the majority of retail fuel outlets have already run out of gasoline, and the terminal network at the major ports will be shutting in the next 24 hours. The good news for Florida is that the boats can return quickly if the ports aren’t damaged and resupply is likely to be faster than what we’re still seeing with Harvey’s aftermath.
More good news on the pipeline front: Yesterday Colonial removed the temporary embargo on Houston to Hebert gasoline shipments, signaling it was restarting that critical origin point which should help product flows all the way up the main line. The pipeline also received approval from the FERC on the EPA-approved plans to comingle products with various vapor pressures in an effort to maximize the amount of fuel being pushed up the pipe.
The progress on refineries in the Pt. Arthur and Houston areas is continuing, although it still appears that it will be several weeks before thing return to normal. The most noteworthy reports this morning come from the Motiva plant in Pt. Arthur (the largest refinery in the country) which is attempting restart on its largest crude unit, and expects to be running around 40% of capacity by the weekend.
Yesterday the API was reported to show a build in crude stocks of 2.7 million barrels, while gasoline drew by 2.5 and diesel declined by .6. That’s directionally what you might expect with so many refinery closures in the previous week, but don’t be surprised if today’s labor-day delayed DOE report has even more dramatic results since their reporting is mandatory, and it’s certainly possible the API had a hard time getting responses from its normal data sources during Harvey.