28 Aug 2020 Featured in: Americas Weekly - Issue 34

Research Highlights - Week 35

Hurricanes Marco and Laura are seen taking a toll on PADD-3 upstream and downstream infrastructure (see Americas Weekly – Issue 34).

  • We see Gulf of Mexico supply dropping to around 1.5 million b/d on average over August, with some 84% of crude production shut in ahead of Hurricanes Marco and Laura.

  • Additionally, around a third of PADD-3 refining capacity was shut in before Hurricane Laura made landfall, which depending on the duration of the shutdowns, could be enough to turn the PADD-3 crude balance net long in August for the first time since April.

  • Product cracks enjoyed a resurgence in anticipation of briefly lower supply, which comes against the backdrop of still bloated inventory. Any support for margins as a result is likely to be short-lived, however, with refiners eager to capitalise on any potential upside in the current environment.