The oil complex is trading much higher this morning due to a flurry of bullish headlines: increased chances of a federal stimulus package, weaker dollar, oil strikes in Norway, and the development of Tropical Storm Delta.
Hurricane season is far from over as we still have the rest of October as well as part of November. Over the past 2 months, we have seen substantial effects on gulf coast refineries. The Gulf coast offshore production makes up 1.5 million barrels per day (bdp) of oil output, which was all shut down last month due to Hurricane Laura, which lasted roughly from August 20th – August 29th.
The oil patch is rallying today being led by refined products. This is due to the fact that Hurricane Sally has left a trail of “catastrophic” rainfall in Alabama earlier this week and is now barreling through the Carolinas and is hindering supply at petroleum terminals.
The U.S. Gulf Coast was hit by Tropical Storm Cristobal yesterday, causing offshore oil production to shut down by almost 24%, equating to more than 430,000 barrels per day. According to the U.S. Bureau of Safety and Environmental Enforcement (BSEE), this was a 140,000 barrel per day improvement compared to June 9th. Occidental Petroleum, BP, and Shell were some of the companies who evacuated employees ahead of the storm. There were a total of 188 platforms and rigs evacuated by those operators. Since the last update, 61 of the 643 platforms had still been evacuated in the Gulf of Mexico. Cristobal battered southern Mexico and shut down ports over the past week, before moving through the Gulf of Mexico and depositing heavy rainfall from Louisiana to Florida.
Just last week, India was hit with the 1st cyclone of the season. Cyclone Amphan struck West Bengal directly wiping out any structure within reach. Amphan’s path of destruction included farmland, schools, businesses, and homes. 10 million people have been affected and 500,000 have lost their homes due to the cyclone. This storm is especially unique because India has recently been on “lockdown” of sorts due to the COVID-19 pandemic. A disaster like this is forcing the intermingling of people that have previously been practicing the social distancing concept to flatten the COVID-19 curve. 3 million people were successfully evacuated prior to the storm, but the balance would rather try to fight off mother nature instead of being confined in a small space. It was a true case of “pick your poison”.