U.S. oil markets are preparing for hurricane season amid already low oil product stockpiles, as forecasts predict a more active season this year.
Between six and ten hurricanes could form in the Atlantic this hurricane season, which starts next month and runs through November, with peak season in September. Three of those are set to become major storm systems, according to the U.S. National Oceanic Atmospheric Administration’s (NOAA) Climate Prediction Center.
Ongoing La Nina and above-average Atlantic temperatures are contributing to the forecasts.
“For the 2022 hurricane season, NOAA is forecasting a likely range of 14 to 21 named storms (winds of 39 mph or higher), of which 6 to 10 could become hurricanes (winds of 74 mph or higher), including 3 to 6 major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher). NOAA provides these ranges with a 70% confidence,” a Tuesday press release said.
The hurricane season is particularly worrisome for the oil industry this year, with refineries and offshore platforms often shutting down and evacuating for safety reasons with some of the more serious storms.
But this year, low product inventories and soaring gasoline and diesel prices are adding to the market concern in the runup to hurricane season.
Refineries in the United States are operating above 90% as of May 13, while total motor gasoline inventories continue to drop and are about 8% below the five-year average, according to the EIA’s Weekly Petroleum Status Report. Distillate fuel inventories increased in week ending May 13, but are 22% below the five-year average.
Meanwhile, crude stocks are 14% below the five-year average.
NOAA stressed that its outlook is for overall seasonal activity “and is not a landfall forecast.”
NOAA will update its forecast in early August.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.