Domestic petroleum demand and production increased notably last week, as the Gulf of Mexico (GOM) energy complex recuperated from the havoc imposed by Hurricane Ida, the latest U.S. Energy Information Administration (EIA) inventory report showed.
EIA’s Weekly Petroleum Status Report, released Wednesday, showed production climbed to 10.6 million b/d for the week ended Sept. 17, up from 10.1 million b/d a week earlier, when output capabilities were still largely hampered by flooding and wind damage as well as power outages caused by Ida.
The storm hit the GOM on Aug. 29. It initially knocked out nearly all production in the region and kept the majority of oil output offline through early September. The recovery is ongoing, but federal estimates show that more than 80% of production is back online.
Output had plummeted in the week ended Sept. 3, dropping from 11.5 million b/d pre-Ida.
Ida’s shocks are “winding down,” analysts at ClearView Energy Partners LLC said.
Demand for the Sept. 17 period, meanwhile, rose 6% week/week, led higher by a 17% surge in distillate fuel consumption. Demand had declined the two previous weeks.
Total petroleum consumption over the past four-week period averaged 21.0 million b/d, up 18% from a year earlier, reflecting the United States’ resilient economic recovery amid coronavirus vaccine programs. Despite festering concerns about the Delta variant of the virus and rising case totals over the summer, consumption of travel fuels continues to climb, extending a months-long trend.
Over the past four weeks, EIA said motor gasoline demand averaged 9.2 million b/d, up 8% from a year earlier, while jet fuel consumption spiked 70% to 1.5 million b/d. Distillate fuel demand averaged 4.1 million b/d, up 13%.
With demand solid, U.S. oil stocks further declined, lengthening a long run of withdrawals over the summer months. Crude inventories, excluding those in the Strategic Petroleum Reserve, decreased by 3.5 million bbl from the previous week. At 414.0 million bbl, inventories are 8% below the five-year average.
With inventories falling and demand steady, West Texas Intermediate (WTI) oil prices climbed more than 1% in intraday trading Wednesday, topping $71/bbl. U.S. benchmark WTI prices are up more than 40% for the year.
“The bullish September spin looks poised to continue to nurture higher oil prices,” Rystad Energy analyst Louise Dickson said. She noted the ongoing draws from storage as well as “general supply tightness that is likely to persist.”
While production has recovered in the GOM, Dickson said, roughly a fifth of the region’s output still needs to come back to reach pre-Ida levels. Those levels, she added, were still below what producers brought to market prior to the pandemic.
© 2021 Natural Gas Intelligence. All rights reserved.
ISSN © 2577-9877 | ISSN © 2158-8023 |