Hurricane Laura Set To Impact Weekly Estimate And Oil Production Average

Welcome to the hurricane edition of Oil Markets Daily!

Hurricane Laura will materially impact the EIA oil storage report set to be released tomorrow. Refinery throughput was materially impacted with ~2.3 mb/d of nameplate capacity being affected. In addition, the Gulf of Mexico oil production shut-in from last week totaled ~1.1 mb/d average for the reporting week.

In combination, EIA crude storage draw this week is around ~4 million bbls based on our tanker tracking method. This could be impacted by just how much refinery throughput was reduced.

In addition to this week’s EIA oil storage report being materially impacted, the August monthly US oil production will also drop by ~400k b/d.

For instance, coming into this week, we had US oil production recovering back to ~11.5 mb/d for the month of August. Thanks to the Hurricane, we are now expecting ~11.1 mb/d.

Source: EIA, HFI Research

As for the preliminary figures for September, we are expecting August to have been the peak for US oil production for H2 2020. We are seeing production decline ~200k b/d as our initial estimate. If the trend continues given the low levels of rigs and frac spread count in the US, then we expect the ~200k b/d decline month-over-month to continue until frac spread count picks up.

And as of last week, the frac spread count remains well below the pre-COVID-19 level of 300+. Unless we see a material recovery in this, US oil production will not reverse the current incoming declines.

HFI Research, #1 Energy Service

For energy investors, the 2014-2020 bear market has been incredibly brutal. But as the old adage goes, “Low commodity prices cure low commodity prices.” Our deep understanding of US shale and other oil market fundamentals leads us to believe that we are finally entering a multi-year bull market. Investors should take advantage of the incoming trend and be positioned in real assets like precious metals and energy stocks. If you are interested, we can help! We are now offering a 2-week free trial, so come and see for yourself!

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Be the first to comment

Leave a Reply

Your email address will not be published.


*