Hurricane Laura Makes Landfall with 150 mph Winds

By Published On: August 27, 2020Categories: Daily Market News & Insights

On Wednesday, WTI crude closed flat as the US braced for the impact from the storm. Early reports would seem to indicate that Houston refineries were spared the brunt of the storm while Lake Charles refineries in Louisiana felt the storms’ full force.

Early Thursday morning, Hurricane Laura made landfall in Cameron, Louisiana, as a category four storm with winds up to 150 mph. Rain, storm surge, and flooding are concerns up to 30 miles inland from the coast. Refineries in the northern Texas and Louisiana coast account for roughly 2.5 MMbpd of refined fuel output, so the storm could keep some supply off the market. But refineries have already been cutting back output to compensate for limited demand, so cuts will likely go unnoticed by fuel markets. The biggest concern relates not to supply, but to fuel transports – if the Colonial Pipeline experiences a shutdown, it could temporarily cut off fuel supplies for the entire Southeastern US.

In inventory news, the EIA reported the fifth straight draw for crude. While the information should be bullish, markets have been hesitant as they consider slow demand recovery and rising coronavirus cases in Europe and Asia. Hurricane and inventory news would usually lift prices; however, prices are down slightly in early trading this morning.

The EIA reported a decrease for crude of 4.7 MMbbls, versus an expected decrease of 3.7 MMbbls. At Cushing, the EIA reported that stocks fell by 0.3 MMbbls. US crude oil inventories are about 15% above the five-year average for this time of year. Distillates reported a surprise build and continue to trend roughly 24% above the five-year average. Gasoline inventories had a moderate draw and are about 5% above the five-year average.

Crude prices are down this morning.  WTI Crude is trading at $43.21, a loss of 18 cents.

Fuel is down in early trading this morning.  Diesel is trading at $1.2216, a loss of 2.3 cents.  Gasoline is trading at $1.3039, a loss of 5.7 cents.

This article is part of Daily Market News & Insights

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