This week, speculative oil positioning…
The U.S. rig count fell…
Traders are scrambling to ship as much oil and oil products from the Louisiana coast before Hurricane Harvey hits it and disrupts loadings, Reuters reports. Oil import and export terminals in Texas were closed earlier, when the storm ravaged the state. It was the strongest hurricane to hit Texas in more than five decades.
Now Harvey is moving to Louisiana, expected to reach the coast today. In a statement from 1:30 AM CDT today, the National Weather Service warned that Harvey “continues to bring threat of tornadoes, high tides, and heavy rain.” Flash flooding is in the forecast for parts of southeastern Louisiana.
Louisiana and Texas together account for almost half of the United States’ oil refining capacity: 5.6 million bpd for Texas and 3.3 million bpd for Louisiana. Much of this—some 2.2 million bpd—was shut down in Texas last weekend. Yesterday, Reuters reported that the storm had shuttered a fifth of U.S. refining capacity, or 3.6 million bpd in both Texas and Louisiana. Now more will be taken offline.
Louisiana is home to the St. James oil trading hub, which has a refining capacity of 2.5 million bpd. Now, amid soaring gasoline prices after the Texas refinery shutdowns, traders are focusing on Louisiana, trying to get as much fuel as possible into the country before the terminals there close, too.
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At least one vessel, the Ridgebury Julia, carrying oil products, was diverted earlier this week, according to Reuters shipping data, from its original destination to Corpus Christi in Texas to New Orleans.
Meanwhile, while gas prices are skyrocketing, WTI is falling due to the decline in refinery runs. The benchmark yesterday widened the gap with Brent crude to US$5.90 a barrel. At about 5 AM EDT, WTI was trading at US$46.34 a barrel, down 0.22 percent from yesterday’s close.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.