Harvey, Irma Forecast to Cut Oil Demand by 900,000 bpd

Harvey, Irma Forecast to Cut Oil Demand by 900,000 bpdHarvey, Irma Forecast to Cut Oil Demand by 900,000 bpd

In the wake of the hurricanes Harvey and Irma, oil demand is expected to drop by some 900,000 bpd this month, Goldman Sachs said on Monday.  

 “Irma will have a negative impact on oil demand but not on oil production or processing,” Goldman analysts said in a note, Oil Price reported.

“Harvey’s negative impact on demand will remain larger, however, given the large concentration of energy-intensive petrochemical activity in its path,” the bank said.

According to Goldman’s estimates, the combined effects of production disruption and demand drop from hurricanes Harvey and Irma alone will lift global oil inventories by 600,000 bpd in September. For next month, estimates are that the hurricanes will lower oil demand by some 300,000 bpd, according to Goldman Sachs.

Gasoline demand will suffer the most from the storms, adding to the expected 150,000-bpd drop this month due to seasonal factors, Goldman said.

Harvey hit Texas and Louisiana two weeks ago, and led to more than one-fifth of the US refining capacity to shut down. Refineries are restarting in Texas. On Sunday, five refineries in the Gulf Coast region were still shut down, with a combined refining capacity of 1,069,300 bpd, equal to 11% of total Gulf Coast refining capacity and 5.8% of total US refining capacity, according to the DOE. Irma made a landfall in Florida on Sunday and is barreling through the state to the northwest.

Last week, Goldman Sachs said that reconstruction in Hurricane Harvey’s aftermath was expected to be ultimately positive for US oil demand in a few months, as fuel consumption is expected to increase when people start rebuilding homes.

However, Goldman said its prediction for increased fuel demand could be upset if Hurricane Irma were to make landfall in Florida where it would not be felt so much on the sparse oil infrastructure than on fuel demand.    

Irma did make a landfall in Florida and is expected to lead to lower demand in the coming weeks.


Add new comment

Read our comment policy before posting your viewpoints