US oil markets are preparing for the hurricane season amid already low oil stocks, as forecasts predict a more active season this year.
Between six and ten hurricanes could form in the Atlantic this hurricane season, which begins next month and lasts until November, with a peak season in September. Three of them will turn into major storms, according to the National Oceanic Atmospheric Administration’s (NOAA) Climate Forecast Center.
Continuing La Nina and above-average temperatures in the Atlantic Ocean contribute to the forecasts.
“For the 2022 hurricane season, NOAA predicts a probable range of 14 to 21 so-called storms (winds of 39 mph or higher), of which 6 to 10 could turn into hurricanes (winds of 74 mph or higher) , including 3 to 6 major hurricanes (category 3, 4 or 5; with winds of 111 mph or higher). NOAA provides these ranges with 70% confidence, “a press release said Tuesday.
The hurricane season is particularly worrying for the oil industry this year, with refineries and offshore platforms often closing and evacuating for safety reasons in some of the more severe storms.
But this year, low product stocks and rising gasoline and diesel prices are adding to market unrest on the eve of hurricane season.
Refineries in the United States are operating above 90% as of May 13, while total gasoline inventories continue to decline and are about 8% below the five-year average, according to the EIA’s weekly oil status report. Distillate fuel stocks increased in the week ending May 13, but are 22% below the five-year average.
Meanwhile, crude oil inventories are 14% below the five-year average.
NOAA stressed that its outlook is for overall seasonal activity “and is not a drought forecast”.
NOAA will update its forecast in early August.
By Julian Geiger for Oilprice.com
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