• 30 mins Oil Production Cuts Taking A Toll On Russia’s Economy
  • 3 hours Aramco In Talks With Chinese Petrochemical Producers
  • 4 hours Federal Judge Grants Go-Ahead On Keystone XL Lawsuit
  • 5 hours Maduro Names Chavez’ Cousin As Citgo Boss
  • 12 hours Bidding Action Heats Up In UK’s Continental Shelf
  • 17 hours Keystone Pipeline Restart Still Unknown
  • 21 hours UK Offers North Sea Oil Producers Tax Relief To Boost Investment
  • 23 hours Iraq Wants To Build Gas Pipeline To Kuwait In Blow To Shell
  • 1 day Trader Trafigura Raises Share Of Oil Purchases From State Firms
  • 1 day German Energy Group Uniper Rejects $9B Finnish Takeover Bid
  • 1 day Total Could Lose Big If It Pulls Out Of South Pars Deal
  • 1 day Dakota Watchdog Warns It Could Revoke Keystone XL Approval
  • 2 days Oil Prices Rise After API Reports Major Crude Draw
  • 2 days Citgo President And 5 VPs Arrested On Embezzlement Charges
  • 2 days Gazprom Speaks Out Against OPEC Production Cut Extension
  • 2 days Statoil Looks To Lighter Oil To Boost Profitability
  • 2 days Oil Billionaire Becomes Wind Energy’s Top Influencer
  • 2 days Transneft Warns Urals Oil Quality Reaching Critical Levels
  • 2 days Whitefish Energy Suspends Work In Puerto Rico
  • 2 days U.S. Authorities Arrest Two On Major Energy Corruption Scheme
  • 3 days Thanksgiving Gas Prices At 3-Year High
  • 3 days Iraq’s Giant Majnoon Oilfield Attracts Attention Of Supermajors
  • 3 days South Iraq Oil Exports Close To Record High To Offset Kirkuk Drop
  • 3 days Iraqi Forces Find Mass Graves In Oil Wells Near Kirkuk
  • 3 days Chevron Joint Venture Signs $1.7B Oil, Gas Deal In Nigeria
  • 3 days Iraq Steps In To Offset Falling Venezuela Oil Production
  • 3 days ConocoPhillips Sets Price Ceiling For New Projects
  • 6 days Shell Oil Trading Head Steps Down After 29 Years
  • 6 days Higher Oil Prices Reduce North American Oil Bankruptcies
  • 6 days Statoil To Boost Exploration Drilling Offshore Norway In 2018
  • 6 days $1.6 Billion Canadian-US Hydropower Project Approved
  • 6 days Venezuela Officially In Default
  • 6 days Iran Prepares To Export LNG To Boost Trade Relations
  • 6 days Keystone Pipeline Leaks 5,000 Barrels Into Farmland
  • 6 days Saudi Oil Minister: Markets Will Not Rebalance By March
  • 7 days Obscure Dutch Firm Wins Venezuelan Oil Block As Debt Tensions Mount
  • 7 days Rosneft Announces Completion Of World’s Longest Well
  • 7 days Ecuador Won’t Ask Exemption From OPEC Oil Production Cuts
  • 7 days Norway’s $1 Trillion Wealth Fund Proposes To Ditch Oil Stocks
  • 7 days Ecuador Seeks To Clear Schlumberger Debt By End-November
Alt Text

Are Electric Cars As Clean As They Seem?

Electric cars are set to…

Alt Text

Tesla To Spike, Then Crash

Electric car giant Tesla is…

Alt Text

EVs Won’t Stifle Oil Demand Anytime Soon

There will be 280 million…

The Upcoming Oil Price Rebound


Key oil ports and refineries have been disrupted along the Texas coast as Hurricane Harvey devastated the region.

(Click to enlarge)

(Click to enlarge)

(Click to enlarge)

Chart of the Week

(Click to enlarge)

• Hurricane Harvey slammed into the coast of Texas over the weekend, walloping the high concentration of oil and gas assets in the region.

• As of Monday, an estimated 2.3 million barrels of refining capacity per day was knocked offline.

• A fifth of the Gulf’s offshore production was sidelined, and although data was a little more opaque, Texas shale production may have seen 400,000 to 500,000 bpd disrupted.

• Major Texas ports are still closed, causing major disruptions in the global oil and gas trade.

Market Movers

Valero Energy (NYSE: VLO) shut down its Corpus Christi and Three Rivers refineries late last week ahead of the hurricane, and said on Monday that it is trying to figure out when they will reopen.

• The refining disruptions have helped spark a rally in refining stocks because gasoline prices are soaring. Major refiners including Valero (NYSE: VLO), Phillips 66 (NYSE: PSX), Marathon Petroleum Corp. (NYSE: MPC) and others all saw share price increases.

• Oil companies saw share prices decline as the Hurricane will weigh on crude prices.

Tuesday August 29, 2017

Oil prices sank on Monday as Hurricane Harvey devastated Houston and other parts of the Texas coast. The outage of key oil ports have disrupted shipments, leaving Texas shale drillers without a destination for their crude. The fear is that oil supplies will build up within Texas, which is why crude prices sank. The flip side is that the refinery outages have caused gasoline prices to skyrocket, opening up a wide crack between crude and products prices.

Related: Texas Oil Production Remains Strong…But For How Long?

Refining outages disrupt fuel supply. An estimated 2.3 mb/d of refining capacity has been shut down temporarily, with major refineries such as ExxonMobil’s (NYSE: XOM) massive Baytown complex shuttered. Royal Dutch Shell (NYSE: RDS.A), Phillips 66 (NYSE: PSX), Chevron (NYSE: CVX) and others also shut down refineries. Gasoline from Texas supplies much of the U.S. East Coast, but it also supplies Latin America and Europe, so the outages will be felt around the world. As for crude, the refiner closures mean demand will take a temporary hit, and plunging oil prices in the last few days reflect that. The rain is expected to continue through much of this week.

Oil production curtailed. An estimated 20 percent of the Gulf of Mexico’s offshore oil production was sidelined from the storm, or roughly 400,000 bpd. The outages offshore aren’t expected to last very long.

Corpus Christi port closed. An oil drilling ship sank in the port of Corpus Christi, blocking the ship channel. The drill ship, owned by Paragon Offshore, could delay reopening of the port. Corpus Christi has grown in importance recently because the volume of crude oil exports leaving the U.S has exited through the city’s port.

Refining outages could get worse. ExxonMobil may begin shutting down its Beaumont, TX refinery today, a facility with a capacity of 362,000 bpd, due to rising waters. It also plans on shutting down a 240,000-bpd crude distillation unit. Motiva Enterprises will make a decision on Tuesday on whether or not to shut down its refinery in Port Arthur, TX, the nation’s largest oil refinery. The facility has a capacity of 603,000 bpd, but Reuters reports that high water and problems obtaining crude oil are affecting operations. At the time of this writing, no word has come from Motiva. The outages of these two refineries would seriously exacerbate the growing gasoline shortage.

IEA: No need for SPR release. The IEA said that despite the catastrophe in Texas, there is no need to release crude oil from strategic stockpiles because the oil market is well supplied. In any event, the shortages will be in the refined products market much more so than for crude oil.

Saudi Arabia and Russia push for three-month extension. Saudi Arabia and Russia have hinted that they would be open to extending the coordinated production cuts for another 3 months after the expected expiration date in March, pushing the deal through the end of June 2018. “There are concerns that if OPEC and non-OPEC producers exit the market in March, traders will react quite negatively to it and behave as if the market is in a free fall,” one senior Saudi oil official told the WSJ. “This also ensures that producers won’t pump full tilt and push prices down,” he said. Still, even if the deal is extended for another 3 months, the group has not coherently sketched out an exit strategy.

Libyan oil fields shut down. Three large Libyan oil fields have been shut down because of a confrontation with militants. One group shut down a pipeline leading to the Sharara field, Libya’s largest. The nearly 300,000-bpd field has been shuttered for a week. Two other fields – the El Feel and Hamada – have also been disrupted. Data is murky right now, and the fields could restart at any moment, but after exceeding 1 million barrels per day recently, Libya’s output is likely been reduced by about 350,000 bpd. Related: Blockchain Tech As A Hedge Against Low Oil Prices

U.S. issues new round of sanctions on Venezuela. The U.S. government slapped new sanctions on Venezuela on August 25, aimed at preventing Venezuela from tapping U.S. debt markets, a major escalation from Washington. The first phase of sanctions targeted individuals, but these new measures prohibits U.S. institutions from trading new bonds with the government of Venezuela or state-owned oil company PDVSA, a move intended to choke off the regime’s finances. Crucially, however, the U.S. exempted Citgo, PDVSA’s U.S.-based subsidiary. Citgo has refining and retail gasoline operations in the U.S.

Statoil strikes out in the Arctic. Statoil (NYSE: STO) reported that it found no oil when it drilled its highly-anticipated Korpfjell field, thought to be a huge oil field in the Norwegian Arctic. Statoil had thought the field could hold more than a billion barrels of oil, which would have made it one of the largest fields in Norway and really opened up the Barents Sea for development. “The results are of course disappointing, but it is too early to draw any conclusions on how this will impact the Barents Sea south-east area,” Jez Averty, Statoil’s head of exploration in Norway and the UK, said in a statement.

By Tom Kool for Oilprice.com

More Top Reads From Oilprice.com:

Back to homepage

Leave a comment
  • Dan on August 29 2017 said:
    Can you imagine how much energy its going to take to clean up the mess? Electricity and oil? That Rover pipeline is now a national emergency.
  • zorro6204 on August 29 2017 said:
    Incorrect, the drill ship did not sink, it broke loose from its moorings and is currently beached on one side of the channel, not blocking anything. What did sink was a tug.
  • foundation on August 29 2017 said:
    The title of this article "The Upcoming Oil Price Rebound" is not mentioned or elaborated upon anywhere in the article. It's just a bunch of facts about recent events with no accompanying thesis, argument, summary, or conclusion. What is the point of this article???

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News