Hurricane Hilary threatens West Coast refinery operations, impacting refined product prices. Forecasts suggest production losses and price fluctuations to watch out for.
Refinery operations on the US West Coast could be disrupted by the imminent arrival of Hurricane Hilary.
On August 18, refined product prices on the US West Coast remain high. The reason for this: anticipation of the arrival of Hurricane Hilary, which is likely to affect refinery operations in the south. The National Hurricane Center predicts that Hilary will become a tropical storm before hitting southern California on August 20. However, potential storm-related flood risks represent a “medium risk” for around 355,000 barrels per day of Southern California gasoline production and 196,000 barrels per day of distillate production, according to analysts at S&P Global Commodity Insights. Production losses could lead to further increases in gasoline and diesel prices, which have already risen due to limited supply and refinery shutdowns.
Higher prices for refined products and risk of disruption to refinery operations due to Hurricane Hilary.
Gasoline prices in Los Angeles rose due to maintenance at PBF Energy. Marathon Petroleum is set to light flares at its Carson refinery. Platts valued the Los Angeles CARBOB at 45 cents more than the September RBOB on August 18. Los Angeles CARB diesel prices have also risen. USWC diesel stocks were below the 5-year average. US Atlantic Coast diesel stocks were down.
Impacts on export flows, inventories and diesel and gasoline prices in the United States.
Refineries in the region monitor the storm on August 18:
“We have comprehensive plans and procedures in place at all of our facilities to protect our employees and assets, neighboring communities and the environment in the event of extreme weather. We are implementing these measures at our west coast facilities likely to be affected by the impending storm,” said Jamal Kheiry, spokesman for Marathon Petroleum, in an August 18 e-mail.
“Phillips 66 keeps a close eye on tropical storms or hurricanes several days before they’re supposed to enter the area. We are monitoring the storm. There is no impact on refining operations at this time,” company spokesman Al Ortiz said in an August 18 e-mail.
Worldwide refinery shutdowns have fallen to around 4 million barrels a day. This is the lowest level of 2023 so far, but it should rise in September with autumn maintenance. As of August 11, U.S. West Coast refineries were operating at 91.6% of capacity, according to the EIA. With stocks already limited, storm-related disruptions to these refineries could affect arbitrage flows. These conclusions come from S&P Global analysts.
“Although there is little direct trade in refined products between the West and Gulf coasts, refined product prices between the regions are linked as the two markets compete for export share to Latin America via the Pacific. Consequently, impacts on refining operations on the West Coast could potentially increase export calls from the Gulf Coast to supply markets along Latin America via the Pacific,” said analysts in a report.
