US commercial crude stocks expected to fall amid Hurricane Delta

US commercial crude inventories likely fell by more than 2.3 million barrels for the week ended Oct. 9 as yet another major hurricane took barrels offline from the Gulf of Mexico and refiners churned through more stored barrels.

The anticipated decline in crude stocks is expected to bring total commercial inventories down to about 490.6 million barrels, according to analysts surveyed by S&P Global Platts. The expected draw would put stocks nearly 11.9% above the five-year average of US Energy Information Administration data, the tightest the overhang has been since May.

Both crude imports and exports are expected to be lower because of Hurricane Delta, which made landfall on Oct. 9 in southwestern Louisiana as a strong Category 2 hurricane. Delta took out more than 90% of the Gulf’s crude oil production — about 1.7 million b/d at its peak just after landfall — and most of those volumes are expected to return throughout this week. The US Bureau of Safety and Environmental Enforcement said on Oct. 12 that offline volumes had fallen to 1.28 million b/d.

US crude exports likely fell to about 2.3 million b/d for the week that ended Oct. 9, according to data from cFlow, Platts trade-flow software, after exports had averaged more than 3 million b/d in most weeks. Exports to Europe alone fell by nearly 900,000 b/d, cFlow showed.

Both LOOP and the Houston Ship Channel were temporarily closed because of Delta.

Commercial crude stocks could see a larger drop depending on how quickly Delta took barrels offline from the Gulf, S&P Global Platts Analytics noted.

Refinery utilization is expected to have ticked 0.2 percentage point lower to 76.9% of capacity, analysts said, leaving runs almost 13% behind the five-year average as the coronavirus pandemic continues to wage war on demand.

Nearly 1 million b/d in refining capacity has remained offline in Louisiana prior to Delta. Citgo Petroleum’s and Phillips 66’s Lake Charles were both damaged from Hurricane Laura in late August and remain offline. And Phillips 66’s Alliance Refinery in Belle Chasse, Louisiana is undergoing maintenance. The Citgo refinery seems to be the furthest from returning, but Citgo said Oct. 11 it should come back online in the “coming weeks.”

As for refined products, total gasoline inventories are expected to have declined around 1.8 million barrels last week to 224.9 million barrels, keeping gasoline stocks behind the five-year average for the first two-week stretch since the week ended March 13.

Notably, it has been lowered refinery runs, rather than increased demand, that has led to the recent gasoline draws.

Distillate stocks are expected by analysts to have fallen 2.5 million barrels to 169.3 million barrels — a 20-week low but still more than 20% above the five-year average for this time of year.

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Source: Platts