Energy: Wallop

Hurricane Laura packed a wallop. The strongest hurricane in 168 years and already there are signs that the U.S. energy industry is trying to make strides to get back to normal, yet we are just starting to assess the damage. This came right after U.S. energy demand posted its best overall demand numbers since before the Covid-19 crisis, according to the Energy Information Administration. But that might not matter much until after we grasp the full impact of the storm on both the supply side and the demand side. From the supply side, the hit to U.S. refining will be the most significant risk as flooding damage and wind damage could keep some down for weeks or even months. U.S. imports and exports will be halted for days, and that could impact the global market.

Fox News reported that hurricane Laura battered the Louisiana and Texas coasts with powerful winds and rain as it made landfall early Thursday as an "extremely dangerous" Category 4 storm. The hurricane brought a catastrophic storm surge and flash flooding to the southwestern part of Louisiana overnight, according to the National Hurricane Center. Laura came ashore near Cameron, La., a community of about 400 residents, 30 miles east of the Texas border.

The hurricane came ashore around 2 a.m. E.T. shattering windows, damaging buildings, and leaving more than 290,000 homes and businesses without power in Louisiana and Texas before weakening into a category 3 storm. The hurricane's maximum sustained winds also weakened to 120 mph by 5 a.m. E.T., down from 150 mph when it made landfall. The landfall was a near-direct hit on U.S. refineries with early reports that Citgo in lake Charles took the brunt of it. Massive flooding should have an impact on other refineries as well, but it is still too early to know.

Yet it is incredible how quickly the U.S. energy industry will try to bounce back. Tanker Trackers reported that after hurricane Laura made landfall into east Texas and west Louisiana, vessels seem to be now heading back to their intended spots after seeking shelter in the far west end of the Gulf of Mexico off Corpus Christi and Brownsville, TX.

If it were not for the storm, the story would have been crude draws and rising demand. Overall total commercial stocks fell 7.8 million barrels as U.S. domestic demand rocked to 19.6 million barrels a day. That was the strongest number since the U.S. went into lockdown mode.

A new market for U.S. crude might be India. Reuters reports that "Indian state refiners have stopped buying crude oil from China-linked companies, three sources said, after New Delhi's recent regulation aimed at restricting imports from countries that it shares a border. The new regulation, put in place on July 23, comes after a border clash between India and China that killed 20 Indians and soured relations between the two neighbors." Iraq is currently India's biggest supplier, followed by Saudi Arabia.