Hurricanes Could Impact Global and US Crude Oil Demand
Crude oil futures
West Texas Intermediate crude oil (DBO) (DIG) (XLE) futures contracts for October delivery rose 1.2% to $48.07 per barrel on September 11, 2017. Prices rose due to expectations that refineries would restart after Hurricane Harvey and Hurricane Irma. The possibility of extending the production cut deal also supported crude oil prices. Saudi Arabia has been pushing the proposal to extend the production cut beyond March 2018.
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Hurricanes impact global crude oil demand
Goldman Sachs estimates that global crude oil demand will fall by 900,000 bpd (barrels per day) in September 2017 due to Hurricane Harvey and Hurricane Irma. It also estimates that global crude oil supply will fall by 300,000 bpd in September 2017.
The fall in global demand is bearish for crude oil (IEZ) (XES) (RYE) prices. US crude oil (SCO) (BNO) prices have fallen 15.8% year-to-date. Lower crude oil prices have a negative impact on oil and gas producers like PDC Energy (PDCE), Cobalt International Energy (CIE), and Continental Resources (CLR).
US refinery crude oil demand and Hurricane Harvey
The EIA (U.S. Energy Information Administration) estimates that US refinery crude oil demand fell by 3,253,000 bpd (barrels per day) to 14,472,000 bpd on August 25–September 1, 2017. The refinery demand fell due to Hurricane Harvey. The refinery demand is at the lowest level since March 2013. The demand fell 18.3% week-over-week and by 2,458,000 bpd, or 14.5%, year-over-year. The fall in US refinery demand is bearish for crude oil (USL) (PXI) (IXC) prices.
US refinery crude oil demand hit 17,725,000 bpd on August 18–25, 2017, and reached the highest level since 1982.
In this series, we’ll look at crude oil production from Saudi Arabia, Russia, the US, and Libya. We’ll also discuss some crude oil price forecasts.