Phil Flynn is writer of The Energy Report, a daily market commentary discussing oil, the Middle East, American government, economics, and their effects on the world's energies markets, as well as other commodity markets. Contact Mr. Flynn at (888) 264-5665
There has never been a storm quite like this. If Hurricane Florence makes landfall in North Carolina or Virginia, as a Category 4 storm, it will be the first storm of such a strong magnitude to hit so far north. If it impacts, damage will be major, and we pray that there are no fatalities.
The markets are already being moved by Hurricane Florence as the Carolinas and Mid-Atlantics prepare for this massive hurricane. Not only is it being felt in energy where the oil market prices rallied initially in the path of the storm, only to sell off later as it fears of potential demand destruction. While millions are in the path of the storm, they are being advised to fill up their gas tanks and to get away. Others are worried that surge in demand may be the last uptick for a while.
Most of the refineries in North Carolina are more inland but there are worries that flooding and power outages could shut down the Colonial Pipeline, the main line to move gasoline and diesel from the Houston, Port Arthur and Lake Charles refineries northeast, running through states in the Southeast to its end-point in Linden, New Jersey.
Duke Energy is warning that widespread power outages are likely in North Carolina and South Carolina – lasting multiple days to weeks. Natural gas demand will drop as the power burn will fall off.
Other commodities are at risk as well, from cotton to soybeans to hogs and cattle. Not only does the hog market have to deal with the rapidly expanding African Swine Fever, that has caused thousands of hogs to be culled in China, it now has to brace for the impact on one of the largest hog producing states in North Carolina.
Lumber is also on the rise as the area is not only a production area, but also because it is likely that much will be needed to rebuild what is expected to be major damage.
And if Florence was not enough, the Atlantic is just a hotbed of storm activity that will keep markets in a state of high volatility as hedgers and speculators scramble to stay ahead of the storms. Reuters reports that Isaac, formerly a Category 1 hurricane, has weakened to a tropical storm but was expected to be at or near hurricane strength when it approaches the Leeward Islands this week, the U.S. National Hurricane Center said. Then you have Hurricane Helene that is looking like it has a boomerang tract, and then you have two other tropical waves that could become tropical storms in a few days.
This comes as oil traders look to OPEC and Russia to see if they have a plan to replace Iranian oil. India is appealing to them as already rising oil and gas prices are causing protests in the country. Reuters reported that U.S. Energy Secretary Rick Perry met Saudi Energy Minister Khalid al-Falih on Monday in Washington, as the Trump administration encourages big oil-producing countries to keep output high. Perry will meet with Russian Energy Minister Alexander Novak on Thursday in Moscow.
The New York Times is reporting that “The Trump administration, taking its third major step this year to roll back federal efforts to fight climate change, is preparing to make it significantly easier for energy companies to release methane into the atmosphere. Methane, which is among the most powerful greenhouse gases, routinely leaks from oil and gas wells, and energy companies have long said that the rules requiring them to test for emissions were costly and burdensome.
The Environmental Protection Agency, perhaps as soon as this week, plans to make public a proposal to weaken an Obama-era requirement that companies monitor and repair methane leaks, according to documents reviewed by The New York Times. In a related move, the Interior Department is also expected in coming days to release its final version of a draft rule, proposed in February, that essentially repeals a restriction on the intentional venting and “flaring,” or burning, of methane from drilling operations.
Today there is a lot to pray for. Not only do we pray for those in the path of the storms but the heroes and victims of the September 11th attacks on freedom. God Bless them and we will never forget.
Stay tuned to the Fox Business Network all day for updates on Hurricane Florence. Also tune in at 3pm to see me on Your World with Neil Cavuto. Call to get my trade levels at 888-264-5665 or email me at email@example.com.
Questions? Ask Phil Flynn today at 312-264-4364