As of Tuesday, September 6, 4:00 pm

According to the Minerals Management Service (MMS), as of 11:30 Central Time September 6, Gulf of Mexico oil production was reduced by over 870,000 barrels per day as a result of Hurricane Katrina, equivalent to 58.02 percent of daily Gulf of Mexico oil production (which is 1.5 million barrels per day). The MMS also reported that 4.160 billion cubic feet per day of natural gas production was shut in, equivalent to 41.6 percent of daily Gulf of Mexico natural gas production (which is 10 billion cubic feet per day).

EIA will release its Short-Term Energy Outlook on Wednesday, September 7, 2005 at 11:00.

Petroleum
As of the close of trading on Tuesday, September 6, crude oil prices and petroleum product futures prices were down from closing prices as of Friday, September 2. The gasoline near-month futures price was down by 12.9 cents per gallon from Friday, settling at 205.5 cents per gallon, while the heating oil near-month futures price was down 3.7 cents per gallon, settling at 205.4 cents per gallon. The NYMEX West Texas Intermediate (WTI) crude oil futures price was down $1.61 per barrel from Friday, settling at $65.96.

DOE released the weekly Gasoline and Diesel Fuel Update. As of September 5, the average weekly retail gasoline price increased to $3.06 (up 45.9 cents from the previous week). Diesel fuel prices increase 30.8 cents to $2.90.

Electrical power has been restored to some of the refineries that were affected by Hurricane Katrina, and some other refineries are expected to have power restored within the next week or so. Some refineries are expected to begin producing again in the next day or two, but other refineries that were damaged more extensively from the hurricane may be down for some time to come. Several factors that may affect refinery production are highlighted in EIA's This Week in Petroleum, next release is September 8, 2005.

As of the August 26 Weekly Petroleum Status Report (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 last year. The next Weekly Petroleum Status Report will be published on Thursday, September 8.

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.

Ports and Pipelines
On September 6 Colonial Pipeline safely returned to full, normal operating conditions late Monday for all of its Main Lines and stub lines. Full commercial electrical power has been restored to serve the pipeline, and Colonial is now delivering into all locations along its system.

On Friday, September 2, the Louisiana Offshore Oil Port (LOOP) was operating again, although not quite at full capacity. Currently, the LOOP is providing crude oil for the Capline pipeline, which delivers to many refineries in the Midwest and tankers are making deliveries to the LOOP. Once power is restored to the Clovelly storage facility, which should occur in about a week, the LOOP should be able to operate at full capacity. More than 10 percent of the nation's imported crude oil typically enters at the LOOP.

As of September 5, Capline (a major crude oil pipeline that runs from the Gulf Coast to Midwest refineries) had returned to service, with flows at over 80 percent of capacity. Two major product pipelines from the Gulf Coast to the East Coast, Plantation and Colonial, dramatically improved their flow rates late last week and as of September 5, both pipelines were running at 100 percent of capacity.

Natural Gas
The natural gas futures price for October delivery was down $.03, to reach $11.66 per million Btu as of the close of trading today, Tuesday, 9/6. In trading on the Intercontinental Exchange, the Henry Hub spot price was $11.56 per MMBtu, down $0.183 from last Friday (September 2) but still about $1.69 per MMBtu more than the price from the previous Friday (before the storm). At market locations across the Gulf region, price decreases today ranged up to $1.75 per MMBtu with an average of $0.25 per MMBtu. The overall average decrease in price was $0.05 per MMBtu.

There are reports that Hurricane Katrina may have damaged three natural gas processing facilities on the Gulf Coast with a combined capacity of 4 Bcf per day, which is the equivalent of almost 8 percent of total national production. Follow-up reports have not indicated expected outages of more than a few weeks, with many units expected on line within a few days. A full assessment of some facilities, however, will require onsite inspections. If these or other plants are inoperable for any length of time, the loss could delay a recovery of natural gas production in the area. Even if platforms and pipelines are either unaffected or readily restored to service, the gas often can't flow to market without treatment. In 2003 (the latest year with complete data), almost three-fourths of total U.S. marketed gas production was processed prior to delivery to market.