As of 3:00 pm, Monday, August 29 --SEE MOST
According to the Minerals Management Service (MMS), Gulf of
Mexico oil production was reduced by about 1.4 million barrels
per day as a result of Hurricane Katrina. The MMS also reported
that 8.3 billion cubic feet per day of natural gas production
was shut in.
The Louisiana Offshore Oil Port (LOOP) stopped making shipments
to onshore facilities as of Saturday, and was supplying its
customers with oil stored onshore. However, even these operations
were stopped on Sunday in order to give employees time to evacuate.
Typically, about 1 million barrels per day goes through the
As of the close of trading on Monday, the WTI futures price
was $67.20, up $1.07 per barrel from Friday's closing price,
while gasoline and heating oil futures prices were up 14.4 and
7.2 cents respectively from Friday's closing prices.
The natural gas futures price was up $1.06, to reach $10.85
per million Btu as of the close of trading on Monday. Spot trading
was suspended at the Henry Hub today. In trading on the Intercontinental
Exchange for other market locations across the Gulf region,
price increases averaged $1.42 per MMBtu with a range from $0.34
to $3.23 per MMBtu. The overall average increase was $1.33 per
With product prices up substantially more than crude oil prices,
it appears that there is more concern about the potential impact
from the loss of refinery capacity. With prices already significantly
higher than they were when Hurricane Ivan hit September 2004,
there is concern that prices could jump significantly higher
if the damage to petroleum infrastructure from Hurricane Katrina
is at least as much as experienced following Hurricane Ivan.
As of August 19 (the most recent data available), U.S. commercial
crude oil inventories were well above the average range for
this time of year. However, gasoline inventories were at the
lower end of the average range, and with demand growing at a
1.6 percent rate over the most recent 4-week period, in terms
of the amount of days gasoline inventories would supply, they
are very low. Distillate inventories remain above the average
range for this time of year. Inventory data as of August 26
will be available at 10:30 am ET on Wednesday, August 31.
As far as the impacts on the projections for the upcoming Short-Term
Energy Outlook it is still too early to say as the length of
the disruption, size and composition (i.e. types of crude oil
and specific refinery outages) will make a large difference.
Near term price movements may or may not translate into significant
projection differences over the upcoming winter.