If short sided oil traders thought they would be basking in sunny big time profits after the storm, I would have to say at this point, they have to be a bit disappointed. Even after a sell off on a bearish Energy Information Administration supply report, oil could only hover about a dollar lower. The EIA reported that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.8 million barrels from the previous week. At 364.5 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories decreased by 1.5 million barrels last week and are in the lower half of the average range. Both finished gasoline inventories and blending components inventories decreased last week.
Perhaps it was because that some are starting to realize that while Hurricane Isaac did not pack as much punch as feared, at the same time he is refusing to go away quietly. This slow moving storm refuses to die and is still saturating the oil, pipeline and refinery rich Gulf coast with lots of rain and tropical storm force winds. This is making it more difficult to bring things back to normal. Despite some reports that the Chevron Pascagoula refinery in Mississippi was not impacted by the storm, now it seems that it is not the case. Bloomberg is reporting that the monster refinery is running at reduced capacity because of Tropical Storm Isaac, according to a statement posted on the company’s website.
Reuters News reported that Entergy Corp, the primary electric utility serving Louisiana, said Isaac has damaged a transmission line serving the Louisiana Offshore Oil Port. LOOP facilities unload crude from large tankers. Its facilities tie into pipelines serving more than 50 percent of the nation's refining capacity. Entergy said restoration of the line "is a high priority," in a statement. The LOOP has been closed due to the storm. Power outages have slowed the Louisiana Offshore Oil Port (LOOP) from getting back to normal. Reuters News reports that the LOOP which handles 13 percent of foreign crude oil coming into the United States, said on Wednesday it believes it has adequate backup power generation to restart deliveries and meet anticipated demand from refiners after Hurricane Isaac.
And that demand will be large and that should support crude prices when those refineries get back on line. Crude imports obviously have been grounded to a halt and the demand for high yielding crude will be high.
Natural gas also got a pop on a Reuter’s report that the Sabine Pipe Line LLC late shut in the Sea Robin/Henry Hub interconnection until further notice due to the water content of gas being delivered to the Hub following Hurricane Isaac's landing on the Louisiana coast. Word of new pipelines being built to bring in more shale gas could mean that the natural gas rally days could be coming to an end.
Dave Tolleris of Weather Risk or DTRISK says that a new storm Kirk and a storm behind it looks like it should go out to sea.
Distillate fuel inventories increased by 0.9 million barrels last week and are below the lower limit of the average range for this time of year. Propane/propylene inventories increased by 0.7 million barrels last week and are above the upper limit of the average range. Total commercial petroleum inventories increased by 4.7 million barrels last week.
Total products supplied over the last four-week period have averaged 19.2 million barrels per day, down by 2.1 percent compared to the similar period last year. Over the last four weeks, motor gasoline product supplied has averaged about 9.1 million barrels per day, down by 1.0 percent from the same period last year. Distillate fuel product supplied has averaged 3.6 million barrels per day over the last four weeks, down by 6.2 percent from the same period last year. Jet fuel product supplied is 3.8 percent lower over the last four weeks compared to the same four-week period last year.