Hurricane Sandy and Crude Oil

Hi Guys,

Any thoughts on how much of a bounce (if any), crude oil would get from Hurricane Sandy. So far, Sandy is forecast to hit the Northeast, not the Gulf where most oil refineries are, but I assume oil prices will still rise a bit.

What are your thoughts?

 

Largely a non event for WTI, might get a subdued bounce in front month NY RB and HO but nothing sustainable. The Gulf is a quick voyage for any physical shortages and pipeline infrastructure in the area should be unaffected.

 

thanks ogarbitrage

 

A longer term decision to slash East Coast Refinery capacity has preceded the Sandy:

http://www.nj.com/business/index.ssf/2012/03/as_more_refineries_close_exper.html

http://www.ft.com/cms/s/0/256f583c-7a83-11e1-8ae6-00144feab49a.html#axzz2AvDSE3jI

http://www.eia.gov/analysis/petroleum/nerefining/update/pdf/neprodmkts.pdf

Looking at the December and January Crack Spreads tells me Sandy isn't much of an event.

It's all about the Gulf Coast.

 

Thanks bone,

I didn't think Sandy would cause too much of a bounce. Just wanted a second opinion from more experienced minds

 

We are awash in hydrocarbons. The US is the Saudi Arabia of Natural Gas. The US is about to overtake Saudi Arabia as the top worldwide producer of crude oil - and that is a very recent development due to new fracking and drilling technology.

The refining capacity is the key. And places like the West Coast and the NorthEast have hurt themselves by making it very difficult for refiners to do business there.

 

how low do you see WTI going over the next week >

thnx

 

Bone - The US has a long way to go to surpass Saudi Arabia and Russia in crude oil production if by crude we're referring to something that can be refined into a high-energy liquid transport fuel (its highest value use). I know there are lots of stories about the US currently producing 10 or 11 million barrels of "oil" per day, but when you strip out natural gas liquids (only a small fraction of which can be used as transport fuels) and low-energy, economically questionable ethanol and biodiesel, we're back to a little over 6 mil bbls/day of real, Jed Clampett-style oil.

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS2&f=M

http://www.eia.gov/petroleum/supply/monthly/pdf/table3.pdf

 

Its just interesting to watch the vocabulary, and price d othe opposite I.E. "awash"

 

OptionBull, Yes, the definitions are important. Unfortunately, the EIA sometimes leads the pack by putting media-friendly charts on their home page, those get put in the paper, and all of a sudden, we're producing 10 mil bbls/day of 'crude' and headed for energy independence. I'm not surprised that the journalists are lazy and don't dig into the numbers, but it's downright dangerous when politicians parrot the same rubbish.