You are viewing an abbreviated republication of ETF Daily News content. This article is brought to you courtesy of. USO currently has an ETF Daily News SMART Grade of C (Neutral), and is ranked #57 of 130 ETFs in the Commodity ETFs category. Year-to-date, USO has declined -18.69%, versus a 10.42% rise in the benchmark S&P 500 index during the same period. The United States Oil Fund LP ETF ( NYSE:USO) fell $0.02 (-0.21%) in premarket trading Tuesday. Another 15 to 25 inches of rain is possible by Friday, so the worst of the flooding is not over. Hurricane Harvey was one of the worst in Texas’ history, but even as the winds die down, the damage from rain remains. S&P Global Platts says that thousands of wells could be affected in the Eagle Ford in South Texas, and Platts Analytics’ Bentek Energy says that the Eagle Ford is currently producing 1.34 mb/d, which is down slightly from the 1.41 mb/d the region is expected to average this month, according to EIA data. ExxonMobil’s shale unit, XTO Energy, shut in all production that was situated in Hurricane Harvey’s path, although production details were not provided. The damage to upstream shale production onshore is a bit more uncertain, although could be significant. More than 100 oil platforms in the Gulf were evacuated, although those platforms will probably come back online much quicker than the onshore refineries.
HURRICANE HARVEY FRACKED OIL OFFLINE
S&P Global Platts says that an estimated 378,633 bpd of oil output was knocked offline as of August 27, or about a fifth of the total production in the Gulf of Mexico, while a quarter of the region’s natural gas output was also sidelined.
Meanwhile, oil production offshore was also affected. Other pipelines in the state were also temporarily idled.Ĭheniere Energy’s Sabine Pass LNG export facility was spared, with only minor damage reported and no expected interruption to service. That could weigh on the prices that Permian shale drillers receive for their product. S&P Global Platts reports that two crucial pipelines servicing the Permian Basin – the BridgeTex and Longhorn pipelines – saw operations suspended, taking 650,000 bpd of takeaway capacity offline. Those disruptions could also inflict pain on upstream shale producers. There are reports that oil tankers are idling offshore in the Gulf, but they will likely have to wait a little while longer before they can dock.
could see a bit of a glut of lighter forms of oil, while heavy oil producers overseas will be hit by a temporary interruption of purchases from Texas refiners. The port outages will wreak havoc on oil differentials – Gulf Coast refiners import heavier crude to process, while coastal ports export lighter oil coming from Texas shale fields to customers overseas. Texas imported 1.9 mb/d of crude oil in May, while the Gulf Coast also exported 0.75 mb/d. “If (U.S.) refineries shut down for more than a week, Asia will need to run at a higher level, because there’s no spare capacity in Europe,” Olivier Jakob, managing director of Petromatrix said in an interview with CNBC. That domino effect will push up refining margins worldwide. It creates a domino effect,” Vikas Dwivedi, global oil and gas strategist at Macquarie, told Reuters. “If there are a lot of shutdowns, whatever capacity is running will get consumed in the U.S., it will have to be, so Latin America will have to get its barrels from elsewhere. Worse, refined product output in Latin America has fallen recently, with Mexico and Venezuela most vulnerable to supply outages in Texas. refined product exports is highly disruptive to the supply chain given the dependency of nations like Mexico and other Latin American countries on the U.S.,” Michael Tran, director of global energy strategy at RBC Capital Markets, told Reuters. In fact, as the world’s largest refined product exporter, disruptions in the U.S. The Gulf Coast also exported 2.7 mb/d of refined products in May, much of which was sent to Latin America and Europe. The disruption will mean that much of the country could see higher gasoline prices soon.
For example, the massive refineries on the Gulf Coast send gasoline through a major artery to the U.S. The effects will reverberate well outside of Texas. That has already forced gasoline futures up by 7 percent to their highest levels in two years. As of Monday morning, more than 2.3 million barrels of daily refining capacity was knocked offline, according to Reuters, or about 13 percent of the nation’s total. The first obvious effect is a disruption to the production of refined products, which could have substantial effects on the U.S. The implications of the refinery outages and the port closures could be dramatic, although how long it will last is uncertain.
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