Janice Dean of Fox News says that Hurricane Zeta is much stronger and should be a Category 2 storm when it makes landfall later today in Louisiana.
She warns that we will see life-threatening storm surge, and strong winds along with heavy rain that will move into the Northern Gulf Coast around midday. According to the Bureau of Safety and Environmental Enforcement (BSEE), we’re already shut in 49.45 percent of current oil production in the Gulf of Mexico and 55.35 percent of the natural gas production.
The storm impact on production will skewer future inventory reports, making it harder to assess larger supply and demand trends. What a great segway to last night’s API report. The API reported a considerable hurricane shutdown that inspired a crude build of +4.577 million barrels with a Cushing, Oklahoma increase of 136.000 barrels. Gasoline also saw 2.252 million barrels. The most supportive part of the report was another colossal drop in distillate supply. The API showed a -5.333 million barrel drop suggesting that maybe the glut is easing as airlines start to fly again and truck traffic begins to move as well.
Bloomberg News reports that, “Trucks from Amazon (NASDAQ:AMZN). and other e-commerce companies have become ubiquitous during the pandemic. In much of the industrialized world, an ever-growing number of vans, trucks, trains, and ships are hauling everything from desks to smartphones as consumers turn to online shopping and companies re-stock their supply chains after months of disruption. It is a potential flip for the oil market: in a world ravaged by a coronavirus, freight is growing rapidly in some areas. And that means diesel – or distillate.
“Truck traffic is up substantially,” said Gary Ross, a veteran oil market watcher, and chief executive officer of Black Gold Investors LLC.
“People have money, and they’re not spending it on going out to the theater; they’re buying goods.”
Official statistics reflect what many can see from their window. In the U.S., for example, large trucks have driven 5% more miles over the last four weeks than they did a year before, according to data from the U.S. Federal Highway Administration. The trend matters for the oil market because trucking accounts for about 16% of global oil consumption and almost half of all diesel demand, according to 2019 data from the International Energy Agency.
Green Energy Fun Fact of the day! Solar farms require 300-400 times more land than a nuclear or natural gas plant and produce 200-300 times more waste than nuclear plants! How about that new greenie dealers?