|Dennis Bearing Down on the GOM|
With more than 96% of Gulf of Mexico (GOM) oil production halted by evacuations and production shut-in caused by Hurricane Dennis, oil prices began rising again this week.
The 96.2% of oil production shut-in through Monday noon represented more than 1.4 million barrels of oil per day. GOM production contributes some 1.5 million bpd—about 30%—of domestic US production.
Natural gas production shut-in represented 62.4% of capacity, or 6.2 billion cubic feet per day.
The force of the storm caused BP’s giant Thunder Horse rig to list at 20–30 degrees. (Earlier post.)
At Tuesday noon, production shut-in had dropped to 57.2% of daily production as crews returned to rigs. The cumulative shut-in oil production for the period from through 12 July is 4,988,360 barrels, which is equivalent to 0.91% of the yearly production of oil in the GOM—or approximately 547.5 million barrels.
“The oil production losses reported by the government were higher than people expected,” said Phil Flynn, vice president of risk management with Alaron Trading Corp. in Chicago. “If we lost that much with Dennis, people are worried about what’s going to happen with the next storm.” (Bloomberg)
Tropical Storm Emily, the fifth named storm since the June start of the hurricane season, formed in the Caribbean and could reach the Gulf next week.
Researchers from the Benfield Hazard Research Centre in London are predicting a very active hurricane seasons for the Atlantic, based on the unusually warm sea temperatures in the tropical North Atlantic. Between July and October, they say, nine hurricanes will probably hit the Atlantic basin as a whole. (BBC)
As sensitive as the global oil market is to supply disruption, the apparently rough storm season ahead (the second in a row), will add even more pressure to the market.