Hurricane Delta roils oil rigs, squeezes gasoline prices

FAN Editor

Hurricane Delta is expected to make landfall, and it is unclear whether the storm will hit as a category two or three storm.

Continue Reading Below

LIVE UPDATES: HURRICANE DELTA

What is clear, however, is the storm is playing a part in increasing oil prices and depending on how hard it hits it could impact some of the same refineries damaged by Hurricane Laura.

Jim Venissat, who’s camp was destroyed by Hurricane Laura, walks amid the devastation in Holly Beach, La., Saturday, Aug. 29, 2020. (AP Photo/Gerald Herbert)

The storm could also create demand destruction. The stronger the storm, the more worries about refinery wreckage and a potential drop in refinery crude demand.  At the same time, a potential squeeze on gasoline is of concern as that market is already tightening as demand rounds from the coronavirus pandemic.

The energy industry has already shut down as of Thursday, 91% of Gulf of Mexico oil production, and 61% of natural gas production. Oil prices rallied over 9% for the week, snapping a 14-day losing streak.

Ticker Security Last Change Change %
USO UNITED STATES OIL FUND L.P. 28.70 -0.45 -1.54%
UNG UNITED STATES NATURAL GAS FUND LP UNIT (POST REV SPLIT) 12.38 +0.52 +4.38%
XLE ENERGY SELECT SECTOR SPDR ETF 30.79 -0.50 -1.60%

What makes this storm even more distressing to refinery row is the region is still reeling from Hurricane Laura months ago. Laura shut 13% or 700,000 barrels a day of U.S. refining capacity, yet the impact on gasoline prices was muted. Yet because demand was still weak due to COVID-19, that monster storm barely moved the gas price needle.

BIDEN, HARRIS AND FRACKING FIREWORKS

Now that story is different. Because of improving demand and refinery issues, inventories are on the verge of falling below the average range for this time of year. That means that gasoline prices will be more sensitive to disruptions to supply. Hurricane Laura spared the refineries from worst-case scenario damage but it did enough damage to restrict supply.

GET FOX BUSINESS ON THE GO BY CLICKING HERE

If these storms take a refinery offline, gas prices will most likely rise for the average consumer. After Hurricane Laura, drivers didn’t see a price bump, but with Hurricane Delta, motorists may not get off so easily at the gas pump.

READ MORE ON FOX BUSINESS BY CLICKING HERE

Phil Flynn is senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world’s leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com.

Free America Network Articles

Leave a Reply

Next Post

U.N. World Food Program director calls on billionaires to "step up"

The United Nations World Food Program is the winner of the 2020 Nobel Peace Prize for combating world hunger and its efforts “to prevent the use of hunger as a weapon of war and conflict.” Last year, the program provided assistance to close to one million people across 88 countries. David Beasley, […]