Demand Destruction

By: Mike Dombroski / September 14, 2018

Oil prices are trading lower today primarily because our industry is looking at the weakening Hurricane Florence more so as petroleum demand destruction rather than a supply disruption event.

NYMEX prices sold off yesterday and are continuing to do so today because Florence struck the Carolina coast as a category 1 hurricane, compared to estimates earlier this week which forecasted landfall as a category 3 or 4. As a result, traders are treating this as more of a demand destruction event rather than a supply disruption. The idea is that demand will still be hampered in the storm’s path for the next few days, but the likelihood of a petroleum supply disruption, particularly to the Colonial pipeline, is lessened than what was forecasted just two days ago. However, supply disruptions are still entirely possible due to the rain and storm surge impact which are difficult to forecast. We encourage our Southeastern customers to touch base with us early next week so we can assess the physical supply situation and help with your petroleum needs.


We know Florence is the focus right now, but next week we’ll be watching the track and development of Tropical Depression Issac. The storm has weakened over the past few days, but its track will take it just southwest of Jamaica Monday, with the potential of going towards the Gulf of Mexico late next week.


October WTI is trading lower by $0.13 to $68.46/bbl, RBOB is off by $0.0225 $1.9677/gallon, and ULSD is lower by $0.0202 to $2.2033/gallon.

Categories: Oil & Gas News, supply demand, supply disruption, hurricane florence

Mike Dombroski

Written by

Mike Dombroski

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