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Laura expected to make landfall in about 12 hours as Category 4 hurricane

  
  Analysis
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The latest from the NHC forecast

The latest from the NHC forecast on Laura
The US National Hurricane Center is out with its latest update on Hurricane Laura and it’s not good.
Laura is likely to continue strengthening today while it moves over warm waters of the northwestern Gulf of Mexico and the vertical wind shear remains low. Laura’s intensity could level-off by this evening due to the possibility of an eyewall replacement cycle and the expected increase in shear around the time of landfall. Even if the rate of strengthening eases, Laura is expected to be an extremely powerful category 4 hurricane when it reaches the northwestern Gulf coast.
This has the potential to be especially devastating for the oil & gas industry and its workers. The current track takes the eye through or near Beaumont, TX or Lake Charles, LA. Both are massive US refining hubs. The Houston area will also be hit but it now looks like the worst of the storm will pass to the east of it.
Category 4 hurricanes have sustained winds in the 209-251 km/h range, or 130-156 mph. Storm surges are generally 13-18 feet but can be as much as 24 feet. The NHC says the storm surge from Laura could penetrate 30 miles inland.
A recent Category 4 storm was Hurricane Harvey in 2017. It inflicted an estimated $125B in damage as it first made landfall near Corpus Christi and then raked the coast, causing widespread flooding in Houston. It matched Katrina as the most-costly US hurricane.
This storm appears to be faster moving so flood damage may not be as high but wind damage could be worse. It will also then cut across the mid-Atlantic states and could reform as a tropical storm off the coast of North Carolina or Virginia.

US storms – Oil producers on Saturday shut 13% of crude oil production ahead of Laura and Marco

  
Analysis, Crude
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Weekend news on industry response to approach of Gulf storms, posting ICYMI:

Via Reuters:
  • Producers halted 240,785 barrels per day of oil production and 119 million cubic feet per day of natural gas output before noon on Saturday, said regulator U.S. Bureau of Safety and Environmental Enforcement.
  • Crews were evacuated from six production and four drilling rigs. Another seven drilling vessels were moved out of the storms’ paths

US weekly oil inventories -1632K vs -2850K expected

  
Analysis, Crude
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Weekly US petroleum inventory data

  • Prior was -4512K
  • Gasoline -3322K vs -1000K expected
  • Distillates +152K vs -1200K expected
  • Refinery utilization -0.1% vs +0.3% expected
  • Production unchanged at 10.7 mbpd
API data late yesterday:
  • Crude -4264K
  • Gasoline +4991K
  • Distillates -964K
Crude rose about 20 cents on the headlines to $42.79 per barrel. The headline isn’t as bullish as anticipated but the gasoline drawdown was larger.
US weekly oil inventories
The OPEC JMMC meeting is also taking place right now with Russia’s Novak stressing the need for full compliance.

OPEC: Sees demand falling 8.95 mbpd this year, rising by 7 mbpd in 2021

  
Analysis, Crude
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Highlights of the OPEC monthly oil report

  • Sees 2020 demand -8.95 mbpd vs -9.07 in prior report
  • Sees US output down 1.37 mbpd this year; +0.24 mbpd next year
  • Oil stocks are 210 million barrels above 5-year avg
  • Efficiency gains and remote working to cap demand rise in 2021 to below 2019 levels
A separate report, citing delegates, sees OPEC+ June compliance at 107%.

Covid-19 lockdown: Petroleum sector throttled

  
  Analysis
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The lockdown has severely hurt the petroleum sector, with oil and gas as well as refining suffering a sharp decline in production.

 

Gas output in April fell 18.6 per cent to 2.16 billion cubic metres (bcm) against 2.65bcm a year ago, according to the oil ministry.The country’s top gas producer ONGC reported a 15.3 per cent drop in output at 1.72bcm.

“The shortfall in gas production (by ONGC) is primarily due to less gas offtake by consumers,” the ministry said.

State-owned Oil India Ltd also produced 10 per cent less natural gas at 202.05 million cubic metres because of the presence of carbon dioxide at one of its fields in Assam and less purchases by consumers because of the lockdown.

Crude oil production fell 6.35 per cent to 2.5 million tonnes (mt) in April.Production at ONGC was marginally lower at 1.7 mt, while private player Cairn produced 19.2 per cent less at 615,800 tonnes.

ONGC had to shut down some of its wells on the western coast because of lower demand from GAIL and the restriction of movement of its staff.

Refineries produced about 30 per cent less fuel in April at 18.9mt as the lockdown kept most vehicles off the roads.

“Reasons for the shortfall in production mainly include low demand due to Covid-19 lockdown,” the ministry said.

Petroleum product demand is expected to fall eight per cent to 4,597 thousand barrels per day in 2020, the International Energy Agency (IEA) said as part of its May oil market report.

Demand is projected to fall 350 thousand barrels per day in the second quarter of 2020, primarily because of mobility restrictions.

The IEA has projected demand to fall 60 per cent year-on-year in April and May.Diesel demand is projected to contract 690 thousand barrels per day in the second quarter of 2020, while demand for aviation turbine fuel (ATF) and kerosene is projected to fall almost 40 per cent in April-May.

Roughly half of the kerosene produced is used as jet fuel and will be severely impacted by airline restrictions, the IEA said.

Overall, India’s oil demand is expected to fall 4.60 million barrels per day in 2020 compared with 5.01 million barrels per day in 2019.

The agency expects domestic crude oil production to continue to decline in 2020.

A profile of natural gas trader John Arnold -Must read

  
Education, Life, US Market
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John Arnold

You could hear John Arnold trying to choose his words carefully. Seated at a conference table inside a drab government building in Washington, D.C., in August, Arnold hardly fit the stereotype of a swaggering, 35-year-old billionaire natural-gas trader.

He wrung his hands as he waited to speak and twisted his wedding band. He filled, and refilled, and re-refilled his water glass. Then he stuttered a bit before he gained momentum and politely advocated rules that would restrict others while allowing him to keep doing what he does.

It was a rare public appearance for one of the least-known billionaires in the U.S. But the stakes were high. Arnold was testifying at a hearing of the Commodity Futures Trading Commission (CFTC).

Click to read complete article

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