Hurricane rally

Crude prices jumped, with Brent October contract reaching 72 $/b, as the Ida hurricane threat became clearer. Ida is expected to reach oil infrastructures by Sunday, passing through the Gulf of Mexico’s main offshore fields and landing in Lake Charles and Baton Rouge, where significant refining capacity is (Exxonmobil, Citigo and Phillips 66 refineries account for 1.2 mb/d of crude capacity). 

As Ida strengthened and was expected to make landfall as a category 2 event, most oil producers announced the evacuation of offshore platform workers. There is about 300 kb/d of oil production capacity at risk of a shut-in, given the magnitude of this weather event. 

Looking at Mexico’s efforts to restore output after a fire broke at Pemex’s main producing facility – KMZ – internal sources are increasingly doubtful that output will be restored by August the 30th. Pemex’s crude is mainly exported to the US, as its sour crude is fitted for US complex refineries. Mexico’s total crude inventories are at about 30 mb, but there is only 7 mb of commercial stocks available for export purposes, according to kpler’s latest measurements. 

We estimated that the impact of the outage until Aug 30th would result in a loss of production of 4 mb. Depleting stocks further would probably force Pemex to lower exports. If Ida’s were to impact crude production more than refineries, US baseload crude supply would be seriously dented for the month to come, forcing the US to run down stocks.

EnergyScan - Oil market news
ARA refined products inventories
Share this news :
Share on twitter
Share on linkedin
Share on email

You might also read :

July 13, 2021

Sharp downward correction

Prices dropped significantly yesterday in most European gas markets, pressured by higher supply and technical selling. Indeed, Russian supply rebounded to 310 mm cm/day on…
April 12, 2021

Mobility goes down in Europe and India

ICE Brent crude prompt contract remained under pressure, at 62.7 $/b, as gloomier economic prospects and low volatility dented financial flows in the market, with…
Join EnergyScan

Get more analysis and data with our Premium subscription

Ask for a free trial here

Subscribe to our newsletter

Don’t have an account yet?  Sign up here!