As of Wednesday, August 31, 4:00 pm --SEE MOST
According to the Minerals Management
Service (MMS), as of 11:30 Central Time August 31, Gulf
of Mexico oil production was reduced by over 1.371 million barrels
per day as a result of Hurricane Katrina, equivalent to about
91.45 percent of daily Gulf of Mexico oil production (which
is 1.5 million barrels per day). The MMS also reported that
8.345 billion cubic feet per day of natural gas production was
shut in, equivalent to 83.46 percent of daily Gulf of Mexico
natural gas production (which is 10 billion cubic feet per day).
Crude oil prices and petroleum product prices have spiked over
the last three trading days. As of the close of trading on Wednesday,
the NYMEX West Texas Intermediate (WTI) crude oil futures price
fell 87 cents per barrel from yesterday's all time high (unadjusted
for inflation), settling at $68.94. The gasoline near-month
futures price gained 14.0 cents per gallon from yesterday, settling
at 261.45 cents per gallon, an all-time high for the near-month
closing price (unadjusted for inflation). The heating oil near-month
futures price fell 2.29 cents per gallon from yesterday's all
time high (unadjusted for inflation), settling at 205.30 cents
As of August 26, (the
most recent data available), U.S. commercial crude oil inventories
(excluding those in the Strategic Petroleum Reserve) decreased
by 1.5 million barrels from the previous week. At 321.4 million
barrels, U.S. crude oil inventories are well above the upper
end of the average range for this time of year. Total motor
gasoline inventories declined by 0.5 million barrels last week,
putting them near the bottom end of the average range. Distillate
fuel inventories increased by 2.7 million barrels last week,
and are above the upper end of the average range for this time
of year. Total commercial petroleum inventories rose by 2.4
million barrels last week and now stand above the upper end
of the average range for this time of year. Total product supplied
over the last 4-week period has averaged 21.5 million barrels
per day, or 2.3 percent more than averaged over the same period
Impact on Refineries. Unlike 2004's Hurricane Ivan, which
affected oil production facilities and had a lasting impact
on crude oil production in the Gulf of Mexico, it appears that
Hurricane Katrina may have a more lasting impact on refinery
production and the distribution system. However, that the news
is varied, with some refineries likely able to restart their
operations within the next 1 to 2 weeks, while others will likely
be down for a more extended period, possibly several months.
There are several factors currently inhibiting refinery production
(see EIA's This
Week in Petroleum).
The U.S. distillate surplus that built up over the last several
months will certainly be important as seasonal emphasis shifts
to heating oil. While distillate prices will react to crude
price and related developments, the more critical near term
product problem relates to gasoline.
On Wednesday, August 31, reports indicated the Louisiana Offshore
Oil Port (LOOP) might unload its first tanker cargo since August
27. A pipeline controlled by the port meets the Capline pipeline
system in St. James, Louisiana, which connects to refineries.
The port has started making deliveries to Exxon Mobil Corp.'s
Baton Rouge refinery.
There are conflicting reports about the damage to the port of
New Orleans. Damage could impact ethanol flow down the Mississippi
River for supply to other regions like the West Coast, which
receives a key part of its ethanol supply from here. Europe
will provide some support for the United States, likely increasing
gasoline exports, although an active turnaround season will
also constrain their ability to fully resupply U.S. requirements.
The natural gas futures price for October delivery was down
19 cents, to reach $11.47 per million Btu as of the close of
trading today, Wednesday, 8/31. In trading on the Intercontinental
Exchange, the Henry Hub spot price was $12.69 per MMBtu in today's
trading, up $0.33 from yesterday (Tuesday) and up $2.84 per
MMBtu from last Friday's price. (Owing to the hurricane, trading
was suspended at the Henry Hub on Monday.) At market locations
across the Gulf region, price increases today ranged up to $4.10
per MMBtu with an average of $0.91 per MMBtu. The overall average
change in price was $0.58 per MMBtu.
There are reports that Hurricane Katrina may have damaged key
natural gas processing facilities on the Gulf Coast, which could
delay a recovery of supplies of the fuel. Even if platforms
and pipelines are either unaffected or readily restored to service,
the gas generally can't flow to market without treatment. Four
plants may have been affected that have a combined capacity
of 5.5 Bcf per day, which is the equivalent of almost 10 percent
of total national production.
Flows through the Henry Hub were zero during the period from
6 p.m. (Eastern Time) on Sunday until 12:30 p.m. on Monday.
Operations presently appear to be around normal. Preliminary
assessment of the Henry Hub operations indicates that the Hub
avoided significant damage from Hurricane Katrina.
Hurricane Katrina apparently has had little impact on receipts
of liquefied natural gas (LNG) shipments at the LNG terminal
at Lake Charles, Louisiana. Trunkline LNG, operator of the facility,
had shut down operations for maintenance to accommodate expansion
tie-ins. The facility was restored to active status ahead of
schedule on Sunday. No shipments were scheduled to arrive at
Lake Charles during the days affected by Katrina.