Baku, Azerbaijan, Aug.26
By Leman Zeynalova – Trend:
Hurricane Harvey looks set to disrupt the US Gulf Coast crude and product markets in the coming days and possibly weeks, according to the US JP Morgan analysis.
“Offshore dislocations appear limited, relative to the more significant onshore disruption to refining and midstream infrastructure. A slow restart of refineries will tighten product markets in the Gulf Coast and US East Coast regions and also further afield,” said the analysis obtained by Trend.
In contrast to previous Hurricane-related outages, the region is a significant supplier of crude and products to Europe, Latin American and increasingly further afield, said the analysts.
However, JP Morgan believes that once the disruption ebbs, a process that could take several weeks, but is more likely to be largely resolved in a matter of days, the bigger picture will still be one of seasonally softer demand for products by consumers in the coming weeks and falling crude use by refineries as planned maintenance ramps up.
“We retain a cautious outlook on crude in the short term, and for 2018, where we expect West Texas Intermediate (WTI) oil to average $42 per barrel as resurgent US crude production combines with increasing OPEC/non-OPEC supply to swamp markets - particularly during the first half of 2018,” said the analysts.
JP Morgan states that arguably, the biggest change in the USGC oil market since it last faced disruption from a major storm is the rise in product and crude exports from the region.
“ Hence, while the impacts of the Hurricanes of 2005 and 2008 were largely (though not exclusively) felt on domestic oil product markets, the consequences of a major disruption on the USGC will be felt in the pricing of oil product markets in Latin America and Europe and crude markets as far away as Asia,” said the analysis.
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