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Petroleum

Hurricane Opal Weakens Gasoline and Crude Prices, Despite Threat to Refineries

Strategic Insights

— 1 min read

Hurricane Opal, a powerful storm in the Gulf of Mexico, threatens to disrupt oil and gas production, but its impact on prices has been largely discounted by the market. Despite reports of potential refinery closures and a significant reduction in crude production, gasoline and crude prices fell on the New York Mercantile Exchange (Nymex) for a second straight day. The November crude contract on Nymex settled down 26 cents at $17.30/bbl, while the November gasoline contract settled down 1.19 cents at 50.74 cents/gallon.

Key Takeaways:

  • The market has largely discounted the threat of Hurricane Opal, with gasoline and crude prices falling for a second straight day.
  • The November crude contract on Nymex settled down 26 cents at $17.30/bbl, despite a drawdown in crude stocks.
  • The November gasoline contract settled down 1.19 cents at 50.74 cents/gallon, despite weather-related refinery closures in the Gulf Coast.
  • API reports of a 4 million bbl rise in gasoline stocks and Department of Energy estimates of a 6 million bbl increase weakened gasoline futures prices.
  • Over 87% of U.S. Gulf crude production, approximately 694,000 b/d, has been curtailed due to the storm.
  • Many refineries have reported paring runs and were closed as the storm approached, with almost 7.6 Bcfd of gas production shut in ahead of the hurricane.
  • Natural gas traders predict a drop in prices once the storm has passed, with some expecting prices to test $1.75/MMBtu by the end of the week.

Statistics:

  • November crude contract on Nymex settled down 26 cents at $17.30/bbl.
  • November gasoline contract settlement down 1.19 cents at 50.74 cents/gallon.
  • 4 million bbl rise in gasoline stocks reported by API.
  • 6 million bbl increase in gasoline stocks estimated by Department of Energy.
  • 694,000 b/d of 800,000 b/d of total U.S. Gulf crude production curtailed due to the storm.
  • 87% of U.S. Gulf crude production curtailed due to the storm.
  • 7.6 Bcfd of gas production shut in ahead of the hurricane.
  • November natural gas contract on Nymex settled up 2.0 cents at $1.829/MMBtu.

Sources:

  • American Petroleum Institute (API) [no date]
  • Department of Energy [no date]
  • Minerals Management Service, Interior Department [no date]
  • Refco Inc. [no date]
  • Enserch Exploration Inc. [no date]

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