Oil and gas prices were lower Thursday morning after Hurricane Laura made landfall in Cameron, Louisiana as a Category 4 storm.
West Texas Intermediate crude oil fell 8 cents to $ 43.31 per barrel while RBOB gasoline slipped 2.12 cents to $ 1.3394 per gallon.
“Hurricane Laura was a hit,” wrote Phil Flynn, Chicago-based senior market analyst at Price Futures Group. “The most severe hurricane in 168 years and there are already signs that the US energy industry is trying to make progress on getting back to normal, but we are just beginning to assess the damage.”
POWER FAILURE AS LAURA BATTERY LA COTE DE LOUISIANA
Early reports indicate that refineries in the Lake Charles area, including Citgo, were storm-battered while operations in Houston were spared.
Analysts are paying close attention to flooding in the region, which will determine the true extent of the storm’s impact on the oil and gas industry.
The biggest concern is that flooding the Colonial Pipeline pumping stations in Beaumont and Lake Charles “would mean gasoline produced in Houston could not make it to the East Coast markets,” wrote Andrew Lipow, chairman of Houston-based Lipow Oil consulting firm. Associates.
THE OIL INDUSTRY CLOSES PLATFORMS, PLATFORMS AND REFINERIES IN THE EVENT OF A STORM
Refineries in the Beaumont and Lake Charles regions, which were closed before the storm, account for 13% of US production, or about 2.5 million barrels per day. Refineries use crude oil to make gasoline and other products.
Crude oil producers, which shut down 84% of Gulf of Mexico crude oil production in the days leading up to Hurricane Laura, will likely resume operations on Thursday. With utilization at 80% due to the demand shortfall caused by the COVID-19 pandemic, refineries spared by the storm can help offset lost production elsewhere in the region.
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Total lost production is expected to be around 10 million barrels, according to Lipow.