Hurricane Harvey wreaked havoc on major PADD 3 refining and distribution facilities, taking offline the sources of refined products for much of the wider United States. Although most of these facilities are back online, the backlog of vessel waiting for permission to enter port (particularly around Houston) has so far been overwhelming. Navarik Data’s proprietary data set on nominations reveals that if all of the activities currently scheduled were successfully carried out as scheduled, this would represent roughly 5 times more barrels per day than the month of July (select as the baseline given it is the most fully Harvey-free month of data). Given it is extremely unlikely ports and terminals will be able to achieve such a Herculean throughput, it seems that certain movements have been prioritized to meet the backlog.
Pre-Harvey, 52% of all barrels moved into or out of PADD 3 were carrying crude, and the remainder was relatively evenly split between other oil and gas products, including non-consumer road fuels. However, post-Harvey, crude has dropped to 31% of all barrels moved, and non-consumer fuels products have likewise fallen, both at the expense of consumer fuels like distillates and gasoline. Moreover, whereas in July the balance of loads and discharges was relatively evenly split, scheduled movements are highly skewed towards loads at PADD 3 ports. This likewise suggests that marketers have decided to focus on getting higher-crack products out to market while the prices are higher, while delaying cargoes like refinery feedstocks into PADD 3 refineries.
This naturally raises the question of what effects this will have on EIA data. The products being loaded onto these vessel despites less crude and/or feedstocks to make them had to come from somewhere. Navarik data projects that the net effect will be a drawdown on domestic crude stockpiles (since refineries could have substituted, to a certain extent, crude shipped overland for crude brought in by boat) and a similar decrease in refined product stocks. If and/or when the congestion improves, Navarik data is uniquely placed to be able to offer market-beating insights.
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