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Chevron announced that non-essential employees and contractors have been pulled from four platforms in the US Gulf of Mexico ahead of a tropical storm.
Potential Tropical Cyclone Six, or Invest 91L, churns in the southwestern Gulf of Mexico early Monday and is forecasted to become a hurricane before it reaches the northwestern US Gulf Coast late Wednesday.
This area of the Gulf Coast is home to approximately 60% of US refining capacity.
Chevron announced that non-essential employees and contractors have been pulled from four platforms in the US Gulf of Mexico ahead of a tropical storm expected to hit the region in just a few days.
Bloomberg said Chevron workers from the Anchor, Big Foot, Jack/St. Malo, and Tahiti installations have been evacuated, noting that production in the Gulf so far remains ‘normal’.
The National Hurricane Center said the tropical system will be named Tropical Storm Francine once it begins to organize. It’s expected to strengthen into a hurricane on Tuesday before landfall along the northwestern US Gulf Coast on Wednesday.
One major concern is the storm’s projected path into America’s energy complex. First, dozens of offshore oil rigs and refineries on land are in the storm’s cone of uncertainty.
WTI crude oil futures are up nearly 1% to the $68/bbl handle.
“Finally, tracking the formation of a storm system in the southern Gulf of Mexico at the moment, I would expect a bid to oil and products on the back of this. NOAA estimate this will hit the Texan coast around Tuesday evening and Louisiana the following day with a fairly high probability of tropical storm level winds. Quick look at WTI and RBOB and I wouldn’t say there has been a material change in positioning on the most recent data, still lower end of length and I would expect new shorts given last week’s price action. One to watch,” Goldman’s Ranald Falconer told clients this AM.
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Oil and gasoline futures moved higher early Monday as the National Hurricane Center tracked a potential tropical system that threatened parts of the US Gulf Coast later this week. The storm could slam into the upper Texas and Louisiana coasts, accounting for about 60% of US refining capacity.
Potential Tropical Cyclone Six, or Invest 91L, churns in the southwestern Gulf of Mexico early Monday and is forecasted to become a hurricane before it reaches the northwestern US Gulf Coast late Wednesday. The storm emerges right on time, at the peak of the Atlantic hurricane season. It is interesting to note that this hurricane season has been very quiet.
“While it is too soon to pinpoint the exact location and magnitude of impacts, the potential for life-threatening storm surge and damage winds are increasing for portions of the Upper Texas and Louisiana coastlines beginning Tuesday night,” the NHC wrote in its latest update.
The latest hurricane trajectory models show strong consensus that the tropical system could make landfall along the Louisiana coast.
This area of the Gulf Coast is home to approximately 60% of US refining capacity. Bloomberg data shows several refineries are in the storm’s cone of uncertainty.
“A small recovery in prices is underway this morning, inspired by hurricane warnings that might threaten the US Gulf Coast, but the wider conversation remains on where demand will come from and what OPEC+ can do,” PVM analyst John Evans told Reuters.
In recent weeks, Goldman’s commodity analyst—now without “supercycle” permeable Jeff Currie—Daan Struyven slashed his expected range for Brent oil prices by $5 to $70-$85 per barrel, citing weaker Chinese oil demand, high inventories, and rising US shale production. The biggest driver for the cut is his belief that “OPEC will raise production in Q4…”
Morgan Stanley has also recently revised its oil price forecasts downward, reflecting expectations of increased supply from OPEC and non-OPEC producers amid signs of weakening global demand. The bank now anticipates that while the crude oil market will remain tight through the third quarter, it will begin to stabilize in the fourth quarter and potentially move into a surplus by 2025.
Morgan Stanley has cut its forecast for the fourth quarter to $80 per barrel, down from $85, and now expects prices to gradually decline to $75 per barrel by the end of 2025, slightly lower than their previous estimate of $76.
None of this is new to the market, where sentiment is ultra-bear…
However, a tropical system that supercharges in the Gulf of Mexico’s warm waters and knocks out a few refineries could easily send energy prices back up. That would spike gas prices at the pump again, putting the Biden-Harris team in a difficult spot ahead of the November elections.
By Zerohedge.com
The post Chevron Pulls Workers From Offshore Oil Platforms As Tropical Storm Nears appeared first on Energy News Beat.
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