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
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