Harvey tanks exports and production
The hurricane seized up much of the Gulf Coast's infrastructure that keeps oil and fuel flowing to markets
Hurricane Harvey cut the US' exports of crude and oil products by more than half and knocked around 0.75m barrels a day of production offline last week, according to initial data from the Energy Information Administration.
Harvey slammed into the heart of America's oil complex on the Gulf Coast, knocking out the refineries, pipelines, pumping stations and ports that are vital to keeping oil and fuel flowing. Refinery runs on the Gulf Coast fell by a third, from 9.2m b/d two weeks ago to 6m b/d last week, amid the worst of the storm.
Many of the Gulf Coast's major oil ports were shut down by the storm, and are only slowly coming back to life. Total product exports fell from 4.5m b/d to 2m b/d, and the US was close to becoming a net product exporter for the first time in years. Crude exports plunged from an average of around 0.9m b/d over the previous month, to just 153,000 b/d last week, the lowest weekly total since 2014. The data has only captured up until Friday 1 September, so next week's data may well show even worse disruptions considering that the flooding worsened over the weekend.
The figures show how crucial the Gulf Coast's infrastructure is to America's export ambitions, and the countries like Mexico, Venezuela and beyond that have come to rely on US-produced oil and fuels.
Months to recover
Each Hurricane brings its own unique problems for recovery, but if past storms are any guide, it is likely to take weeks, if not months to fully recover to pre-storm levels. When Hurricane Rita hit Texas in September 2006, export and import levels didn't return to normal until the following March.
Oil production also took a major hit, but is likely to bounce back more quickly. At its peak, Harvey knocked out around 450,000 b/d of output in the Gulf of Mexico. Data for onshore disruptions, especially at the major Eagle Ford shale field, have been sketchier, but the EIA figures imply at least 300,000 b/d of Eagle Ford output was shut in by the flooding. Initial estimates from the Texas Railroad Commission had put the figure as high as 500,000 b/d.
Traders will be watching crude inventory levels closely in the wake of the storm. After several months of steady drawdowns brought inventory levels back within the five-year range, inventories jumped 4.6m barrels, to 462.4m barrels, last week. With so many refineries shut down, there was nowhere to put crude but in storage. While most facilities have begun to restart operations, it will be some time before there will be a return to normal, so stocks are likely to continue to rise.