Impact of Hurricane Ida Shown for the First Time
- Refinery use falls on Gulf Coast
- Gasoline demand rises
- Domestic crude oil production loses 1.5 million barrels daily
- Natural gas price holds $5.00
Alan Levine—Chairman, Powerhouse
(202) 333-5380
The Matrix
Government data on the impact of Hurricane Ida on energy interests made their appearance in the weekly Petroleum Balance Sheets produced by the Energy Information Administration. The reports covered petroleum supply and demand for the week ended Sept. 3, 2021.
It was no surprise that the data revealed losses of supply and demand. It may have been a surprise that demand for motor gasoline showed a small (30,000 barrels per day) increase.
The increase in gasoline consumption came about despite a dramatic reduction in refinery use. The Midwest lost 5.4 percentage points of refinery use during the week. Activity on the Gulf Coast fell a whopping 16.7 percentage points to 75.7 points. This drop came about because nine Louisiana refineries were temporarily shut.
The impact of Hurricane Ida is being offset each day. As the week of September 10 ends, three of the still-shut refineries accounted for 739,000 barrels of capacity.
The Gulf of Mexico (GOM) crude oil and natural gas production also declined. The Department of Interior’s Bureau of Safety and Environmental Enforcement, (BSEE) said that 65 offshore platforms were evacuated, about 11.6% of the GOM. Oil shut-in came to 1.2 million barrels per day.
The effect of Hurricane Ida was confirmed by the sharp drop in total U.S. oil production. Production had fallen to 10 million barrels daily as the COVID-19 pandemic advanced last year. Production has since struggled to regain output, but production of 11.5 million barrels daily for the week ended August 27 lost 1.5 million barrels per day, back to 10 million daily barrels.
Loss of Gulf of Mexico crude oil production and refinery throughput limited Gulf Coast supply. Heavy rainfall along the line of Hurricane Ida’s path to the north and east failed to significantly depress demand. As noted, gasoline consumption had a small gain. The conflict between hopes for an expanding economy and a resurgent pandemic that could hold demand back has limited price ranges. There are signs that the global economy may be slowing, potentially limiting new highs on prices.
Supply/Demand Balances
Supply/demand data in the United States for the week ended Sept. 3, 2021, were released by the Energy Information Administration.
Total commercial stocks of petroleum fell 10.4 million barrels during the week ended Sept. 3, 2021.
Commercial crude oil supplies in the United States decreased by 1.5 million barrels from the previous report week to 423.9 million barrels.
Crude oil inventory changes by PAD District:
PADD 1: Unchanged at 8.3 million barrels
PADD 2: Plus 2.0 million barrels to 117.1 million barrels
PADD 3: Down 2.6 million barrels to 228.0 million barrels
PADD 4: Down 0.3 million barrels to 23.5 million barrels
PADD 5: Down 0.7 million barrels to 46.9 million barrels
Cushing, Oklahoma, inventories were up 1.9 million barrels from the previous report week to 36.4 million barrels.
Domestic crude oil production was down 1.5 million barrels per day from the previous report week to 10.0 million barrels daily.
Crude oil imports averaged 5.810 million barrels per day, a daily decrease of 531,000 barrels. Exports decreased 698,000 barrels daily to 2.342 million barrels per day.
Refineries used 81.9% of capacity; 9.6 percentage points lower from the previous report week.
Crude oil inputs to refineries decreased 1,636,000 barrels daily; there were 14.302 million barrels per day of crude oil run to facilities. Gross inputs, which include blending stocks, fell 1,704,000 barrels daily to 14.845 million barrels daily.
Total petroleum product inventories fell 8.9 million barrels from the previous report week.
Gasoline stocks decreased 7.2 million barrels from the previous report week; total stocks are 220.0 million barrels.
Demand for gasoline rose 30,000 barrels per day to 9.608 million barrels per day.
Total product demand decreased 2.865 million barrels daily to 19.954 million barrels per day.
Distillate fuel oil stocks fell 3.1 million barrels from the previous report week; distillate stocks are at 133.6 million barrels. EIA reported national distillate demand at 3.685 million barrels per day during the report week, a decrease of 705,000 barrels daily.
Natural Gas
Natural gas spot futures prices pushed to a new high of $5.058 as the week of September 10 ended. Holding support at five dollars should be taken bullishly. The rally began on August 10 at a low of $3.734, and the effects of Hurricane Ida, essentially the loss of shut-in supply and pent-up demand, could carry prices even higher.
The Bureau of Safety and Environmental Enforcement reported 1. 72 Bcf/d of natural gas production still shut-in on Thursday, September 9. 2021. This is about 77.2% of Gulf of Mexico supply. Powerhouse’s Weekly Energy Market Situation for September 6 noted the next significant resistance was at $6.49.
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