US oil production recovers quickly

Ripples from Hurricane Harvey have spread across the global oil industry

By Edward Bell

Last night’s EIA data showed a rapid recovery in US oil production following the impact of Hurricane Harvey. Total crude output rose 572k b/d, making up substantial ground on the big drop a week earlier. The gain in crude inventories was to be expected as refinery demand has slumped to its lowest level in years.

US fuel prices return to pre-storm levels

Source: EIKON, Emirates NBD Research

Of interest following the hurricane, US gasoline futures have more or less returned to their pre-storm levels of around USD 1.60/g. US refinery margins have also come down off their spike. But prices for gasoline and cracks over Brent in Singapore have held onto their gains. Considering oil demand in Asia has seen some lagging of late—in India and China in particular—and total Singapore stockpiles remain elevated is some reckoning around the corner for fuel prices in Asia? US crude exports recovered nicely last week—up 621k b/d in a single week—and we’d expect to see more crude unloaded onto international markets if inventories keep building in the US as refinery restarts hit into a seasonal downswing for demand.