| « What’s that dust on the horizon, or is it a cloud, a cloud of locusts perhaps? | Uncertainty has intensified market volatility this week » |
Augustarmageddon
We have seen a whole lot of trouble tumbling around us this week…
It began with the unexpected passing of Jack Layton creating a leadership void in Canada. Later in the week a few earthquakes, a credit downgrade in Japan, the demise of the Gaddafi regime and to end the week, the approach of Hurricane Irene bearing down on the east coast of the United States.
This could be a perfect script for a new Hollywood disaster movie called “Augustarmageddon.”
We are fortunate Hurricane Irene will miss the highly concentrated and vulnerable oil production and refining complex of the U.S. Gulf Coast. This category 4 hurricane is expected to strike the Outer Banks of North Carolina on Saturday with winds in excess of 115 mph or 185 kph, causing major flooding, gasoline demand destruction and refinery closures in Pennsylvania, New Jersey and Ohio, these three states being home to 13 refineries with a capacity of 1.6 million barrels per day. The mass evacuation of millions of people along the eastern seaboard will affect normal business routines well into next week. Depending on the extent of flooding, power outages and property damage, we anticipate next week’s U.S. inventory report to show a significant rise in gasoline and diesel inventories which could help to lower crude and fuel prices in the short term. Traders in New York will be watching closely and may increase daily fuel spot prices if supply disruptions occur.
By: John Voros, Senior Petroleum Advisor
Find out more in this week’s Energy Report. For subscription rates, email us at info@en-pro.com.