Uncovering good news from the Gulf

Many Americans can breathe a sigh of relief as workers slowly return to the Gulf to survery storm damage today. As of Wednesday morning, I have yet to hear of major damage to any facility that processes oil or natural gas. That has led to a large oil sell-off the last few days, with crude oil shedding almost $10/bbl and gasoline losing around 20-cents/gal.

Valero has reported no major structural damage to its 250,000bpd St. Charles, LA refinery. The refinery does have electrical power but will check to make sure the power is reliable.
Shell Oil Co. has reported “So far, so good” from its VP, Frank Glaviano after taking an aerial survery of its offshore operations.

Valero’s 295,000bpd Port Arthur, TX refinery as well as its 245,000bpd Texas City, TX refinery continue to run at reduced rates at this hour.

As of Tuesday though, the USMMS (United States Minerals Managemen Service) was reporting 100% of Gulf oil production remains closed while 95.4% of its natural gas production remains closed.

This is good news for traders, who are shedding contracts as quickly as possible, leading to large losses in oil and gasoline prices.

In Grand Rapids, we should see prices down into the $3.60’s before any hike, with nationwide averages approaching $3.50!

Stay tuned as more storm updates are available.

1 Comment

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  1. I’m not sure why the market is acting the way it has the last few days. It really doesn’t make sense.

    96% of the Gulf output is shut down and waiting for Gustav to move on. Hanna is blocking ships from entering the Gulf, after it is gone on Friday it takes 3 days for them to go from the Fla. Keys to the LOOP. I would guess that the ships are sitting at least a day or 2 away from the Keys. So, they probabally wouldn’t be able to get in to offload until Tuesday or Wednesday, and by that time they most likely wouldn’t have time to get out before Ike gets there.

    I really don’t think the output will be able to increase much if any for a week or 2.

    Well, regardless of what the market is doing, we had an 11 cent increase tonight. I would think that there is an extremely good chance that Speedway will move to $3.959 on Thursday morning. Unless something changes with these 4 storms, we will most likely see more increases and be put on allocation soon.

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