Lethal, precise, and surprising may be the words of the day. These are the words uttered by Israeli Defense Minister Yoav Gallant when asked about Israel’s military response to Iran’s missile attack. Yet, the same words might be used in connection with Hurricane Milton which has left over 3.25 million people without power and has done what I am sure will be billions in damage.
The scary part is the storm is not over yet and the impact on energy supply and demand will be felt for months. The other scary part could have been much worse because some prayers were answered as the storm that was a category 5 weakened to a category 3 as it hit landfall. Still, the damage is horrendous.
Amazingly enough, offshore oil platforms that were shut down before the storm are already back in operation and amazing testament to the skills of the US oil and gas industry. The Port of Tampa took a big hit and that could impact its terminal complex that is the delivery hub for almost 15 million tons of petroleum products annually, including gasoline, diesel, and aviation jet fuel.
Fox Weather reported that:
“Hurricane Milton slammed the Tampa-St. Petersburg area with over 100 mph wind gusts and torrential rain Wednesday, knocking out power to well over a million in the metro area and damaging the home of the city’s baseball team.”
St. Petersburg’s airport reported more than three hours of gusts over 70 mph, including seven gusts over 90 mph and a peak gust of 101 mph just after 10:30 p.m. ET.
Tampa International Airport recorded a peak gust of 93 mph so far. The ferocious winds caused significant damage to Tropicana Field in St. Petersburg, where video showed massive tears in the stadium’s fabric roof. The facility is home to the Tampa Bay Rays.
And while energy traders assess the impact of the storm the most recent report from the Energy Information Administration suggests that US demand for petroleum products is surging. The EIA put the four-week moving average for total US petroleum at 20.6 million barrels a day up 2.9% from the same period last year.
Gasoline demand is averaged 9.0 million barrels a day, up by 7.5% from the same period last year. Distillate fuel demand averaged 3.9 million barrels a day over the past four weeks, down by 0.9% from the same period last year. Jet fuel demand was up 9.2% compared with the same four-week period last year.
The strong demand numbers make our oil supplies look tighter especially as the market awaits the possibility that Israel hits Iranian energy infrastructure.
The EIA put U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 5.8 million barrels from the previous week. At 422.7 million barrels, U.S. crude oil inventories are about 4% below the five-year average for this time of year. Total motor gasoline is down by 6.3 million barrels from last week and are about 4% below the five-year average for this time of year. Distillate fuel inventories fell by 3.1 million barrels last week and are about 9% below the five-year average for this time of year. time of year. Total commercial petroleum inventories decreased by 8.1 million barrels last week.
This comes as US Oil production is stagnating. The EIA in its Short-Term Energy Outlook lowered their forecast for us oil output to increase by only 20,000 barrels a day next year, to 13,54 million barrel a day much lower than previously estimated. The US annual oil production growth rate of growth is now projected at 2.4% versus 3.2%.
The debate in the energy markets right now is whether or not the trade is underestimating the impact of a potential strike on Iranian oil supplies. The concern is that if we are underestimating the impact that we could face more pain from an oil price shock if the event is a one-and-done then the market probably has it right. If not. Well, get ready.
Massive power outages could impact electricity demand for natural gas today we get an inventory report it looks like the average guest is somewhere around an injection of 72 to 73.