Crude down over $1 tonight. If 5 million barrels of products (gasoline, distillates, heating oil) have been lost each day since last tuesday, that would make 30 million barrels of product lost. Not to mention all the lost crude oil and natural gas this past week. According to MMS, 100% of the gulf production is still shut in, approximately 1.5 million barrels of crude a day. Rita halted 24% of U.S. refining. Katrina a fraction of that since most refiners are in texas. Also, during Katrina, lost oil drilling was replaced by SPR. there is no reserves for refined products. Big storm or not, the fact is, a ton of REFINED product was LOST here. so what gives tonight? Maybe traders are still in the, "phew, missed houston, no deaths" mode.
Reserves are being loaned, no real damage has been done to the refineries and OPEC finally acquiesced to giving the world a break. In any case, who care for all this talk? The price action is telling us all we need to know.
price action doesn't tell all. example.. when saddaam hussein was found, s&p futures spiked up sunday night. they immediately reversed the next day's open cos it was nonsense. that is why i care.
By Laura MacInnis WASHINGTON (Reuters) - Federal Reserve Chairman Alan Greenspan told Russian Finance Minister Alexei Kudrin that risks to the oil market from a pair of U.S. hurricanes have peaked, and pressure on refineries should ease, the Russian minister said on Sunday. Kudrin said Greenspan, in bilateral talks on the sidelines of semi-annual meetings of the World Bank and International Monetary Fund, did not say outright that he expected oil prices to drop, but signaled the worst of the squeeze might be over. "Greenspan believes that now we've overcome all the peaks of the risks of those storms ... (and) Katrina and Rita have exhausted their influence on the oil market already," he told a small group of reporters through a translator. Oil prices fell about $1 a barrel on Sunday after Hurricane Rita, the second major storm to hit the U.S. Gulf Coast in a month, did less damage to oil refineries than first feared. Markets had fretted the storm would bring prolonged energy shortages and compound the damage from Hurricane Katrina, which pushed oil prices to a record $71 a barrel in August. Greenspan, in his discussions with Kudrin, said he thought the situation at U.S. refineries "is going to be easier" now that the storms have passed.
When Katrina hit, the US had a 7 month average daily consumption of gasoline of 9 million barrels. 8.3 million came from domestic refinery production. Gasoline stocks when Katrina hit were at about 200 million barrels. Imports are a little over 1/2 million barrels per day. With 25 % capacity reduction, the US is producing 6.1 million per day. SInce the hurricane, imports have increased, but I don't know how much. But lets assume to 1 million bb per day. This means the country has to draw upon its reserves to provide the missing 2 mm bb per day. That gives the country a little more than 3 months. Gasoline futures will reveal the collective professional prognosis for downed refinery production going online. And they seem to feel the product will not get scarce, as gasoline is now close to tracking Crude at the rate before Katrina.