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Petroleum industry

Crude Prices Surge Amid US Storm Warnings and Supply Disruptions

Strategic Insights

— 1 min read

Crude prices experienced significant gains last week on the back of US storm warnings and supply disruptions caused by Hurricane Ivan. The effects of the storm were still being felt in the US pipeline market, with the spread between Heavy Louisiana Sweet (HLS) and Light Louisiana Sweet (LLS) collapsing from over $1/bl to 55 cents/bl in just two days. US refiners have had to compensate for the domestic supply disruptions by pulling more crude south from Canada, causing the Express pipeline to ration space to some shippers next month.

Key Takeaways:

  • Crude prices surged over the week on US storm warnings and an announcement by Yukos to cut deliveries of crude to China, with November BFO rising by $5.37/bl to $45.53/bl.
  • The US weekly oil report revealed a 9.1mn bl draw in US crude stocks, following supply disruptions caused by Hurricane Ivan.
  • The effects of Hurricane Ivan were still being felt in the US pipeline market a week after the storm, particularly for platforms that contribute oil to the Heavy Louisiana Sweet (HLS) stream.
  • The spread between HLS and LLS collapsed from more than $1/bl to 55 cents/bl in just two days.
  • US refiners have had to pull more crude south from Canada to compensate for domestic supply disruptions, causing the Express pipeline to ration space to some shippers next month.
  • Most North Sea grades saw differentials to the BFO benchmark gain over the week, with sellers reporting an upsurge in buying interest from the US, competing with lively local demand.
  • Trade on November Nigerian cargoes has yet to get into full swing ahead of the release of October official selling prices and confirmation of November loading programmes.
  • Asia-Pacific demand pulled two to three cargoes of medium-heavy Angolan grades into China following the release of the November Angolan programme.

Statistics:

  • November BFO rose by $5.37/bl to $45.53/bl.
  • The US weekly oil report revealed a 9.1mn bl draw in US crude stocks.
  • The spread between HLS and LLS collapsed from more than $1/bl to 55 cents/bl in two days.
  • The Express pipeline will ration space to some shippers next month.

Sources:

  • Reuters
  • Platts

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