Hurricane season whips up further headwinds for US oil industry

An oil pump is seen operating in the Permian Basin near Midland, Texas, US on May 3, 2017. (Reuters/File Photo)
Updated 08 September 2018

Hurricane season whips up further headwinds for US oil industry

  • The pace of oil production reached its highest point this year
  • But earlier in the week, a total of 48 offshore platforms were closed in the Gulf of Mexico, anticipating the arrival of Tropical Storm Gordon

RIYADH: The pace of oil production, which reached its highest point this year, coupled with slowing economic momentum in some nations, was last week reflected in downward sentiment on oil prices. Brent fell to $76.83 per barrel on Friday, with WTI down at $67.75 per barrel.
The deterioration in oil prices came about despite the strong environment in the world of physical crude purchasing. This added to localized market tightness.
Earlier in the week, a total of 48 offshore platforms were closed in the Gulf of Mexico, anticipating the arrival of Tropical Storm Gordon. But the storm quickly turned into a non-event. These offshore rigs are where most of the US sour/medium crude is produced. Most sophisticated US refineries were built to handle a choice of sour/medium crude, which is close to the crude specifications of imports from the Arabian Gulf.
Although the inclement weather in the Gulf of Mexico eased, the coming weeks will likely see further disruption in oil operations. The US is entering the peak months of the Atlantic hurricane season, which runs through November. While this year’s hurricane season is predicted to be below average, forecasters are still expecting 11 named storms, four hurricanes and one major hurricane. 
There is the potential for a tropical storm to arise this week, although it is yet unclear if it will threaten the western Gulf of Mexico and the Texas coast. This is the location of the offshore oil and natural gas platforms that produce about 5 percent of US natural gas and 17 percent of crude oil. Onshore facilities account for about 45 percent of US refining capacity and 51 percent of its gas processing. The Louisiana Offshore Oil Port (LOOP) will be closely monitoring Atlantic storm activity, which is significantly more aggressive than it was last month.
The weather uncertainty has added to the headaches caused by the increasing demand for refined products in an already tight oil market. Lower volumes of refined petroleum products are coming out of India with lower exports overall from Northeast Asia. India is recording extremely fast growth in consumption with its refineries strained to keep pace with local requirements.
Global refining utilization is at a five-year high, with increasing product demand growth, as key economies returned to elevated utilization. Strong macroeconomic factors coupled with low refined product inventories have resulted in strong refining margins. This has incentivized refineries to run at elevated rates relative to 2017, especially during the peak summer driving season.
Some analysts might claim that high refinery throughputs would start to pressure refining margins globally, as a result of building refined products inventories. However, as the summer driving season ends, refineries enter the autumn turnaround season. Refineries typically process less crude in early October as they undertake autumn maintenance, so inventories will start to deplete.
The coming weeks should start to bring clarity to the issue of the medium and heavy crude coming out of Iran. It is thought that the US will refuse to grant waivers in regard to purchases of Iranian crude. This will leave Asian buyers in urgent need of over a million barrels per day of medium/sour crude from new suppliers. That could result in a shortage and a price rise.
Analysts are yet to sound any alarm on prices, preferring to wait and see if — due to US sanctions — demand weakens on lower economic growth in China. Despite agreements, Beijing could decide to increase purchases of Iranian oil, easing pressure on other suppliers.

Greek town bets on slow tourism to overcome virus

Updated 30 min 49 sec ago

Greek town bets on slow tourism to overcome virus

  • The pandemic is an opportunity to promote alternative tourism, fishing tourism

PREVEZA, Greece: Yannis Yovanos scans the waters of the Ambracian Gulf with his binoculars for dolphins shooting into the air before curving back down into the sea.

His early warnings prompt just a dozen tourists on the deck of Yovanos’ small boat to scramble for their smartphones, hoping to secure a snap of the aquatic mammals’ aerial acrobatics.

Officials in his home town of Preveza hope that it’s just this kind of small, family-run business that will help them overcome the coronavirus’ impact on travel — while sparing the region the environmental impact and economic distortions of the mass tourism more common on Crete or the Ionian islands.

“We don’t want to stay all day on a beach, we’re looking for a different experience,” said Dutch tourist Frederika Janssen.

“The pandemic is an opportunity to promote alternative tourism, fishing tourism,” as well as local life and culture “directly related to the natural resources that date from Antiquity,” said Constantin Koutsikopoulos, who heads the agency charged with managing the Ambracian Gulf.

Inside the gulf is a protected wetlands park, some 400 sq. km that is one of Europe’s Natura 2000 wildlife diversity regions.

One hundred and fifty dolphins, loggerhead sea turtles and 300 species of aquatic birds including the rare Dalmatian pelican live in the lagoons and reed beds of the gulf.

Nestled between green hills, the Ambracian Gulf is fed by rivers descending from the mountains of the Epirus region of northwestern Greece.

Yovanos’ hometown guards the little strait that connects the gulf with the Ionian Sea.

Dolphin watching trips like these mean “I am realizing my dream of living the life of a fisherman among our natural riches,” said the 49-year-old from behind a greying beard.

For Greece as a whole, a gamble on reopening its borders to tourists as early as June appears to have paid off for now.

New coronavirus cases have appeared only slowly since then, with fewer than 6,000 cases and just over 200 deaths nationwide from the pandemic.

Although Preveza has opted for a slower, more family-oriented approach to travel compared to better-known Greek destinations, it hasn’t renounced Mediterranean holiday clichés altogether.

With the sector suffering a big hit from the coronavirus epidemic, Preveza city officials launched a promotional campaign, securing the title of safest place for a European beach holiday from website European Best Destinations.

“Monolithi beach, the main beach of Preveza, is ... the longest one in Europe... you won’t have to struggle to get a nice spot, fix your beach umbrella and spend relaxing days in the sun,” it wrote.

And new infrastructure in the shape of a marina has helped draw sailors away from packed ports on the islands.

“Preveza is the right place compared to Corfu which is a very nice island but very crowded,” said Nick Ray, a British businessman, from the deck of his yacht that had put into the town’s port.

With its fishing and fish farming, the Ambracian Gulf is already the region’s economic motor.

Sustainable, environment-focused tourism should give the authorities even more reason to deal with the threats to the gulf such as pollution, poaching and illegal fishing.

There’s even something for ancient history buffs in the ruins of Nicopolis, founded by Caesar Augustus in honor of his naval victory nearby in 31 BC, where some Roman mosaics are still preserved.