Hurricane Milton Blew Up From A Category 2 To A Category 5 Hurricane In Just 12 Hours Monday

After a furious 5 day buying spree that marked the biggest weekly rally of the year, energy markets are seeing a round of healthy selling Tuesday after China announced it was not planning more major stimulus to prop up its slumping economy which has been a drag on fuel prices for most of the year.

In addition, some reports continue to suggest that even if Israel makes a strike on Iran’s oil infrastructure, the 5-6 million barrels of spare oil production capacity OPEC & Friends are sitting on will be able to offset the loss of output. The sharp drops in refining margins globally this year also suggest there’s plenty of spare capacity to help offset any product shocks near term if Iran’s refineries are targeted.

Hurricane Milton blew up from a category 2 to a category 5 hurricane in just 12 hours Monday, becoming one of the largest and most intense storms on record in the Atlantic basin with sustained winds of 180 miles per hour. Those winds have eased overnight as the Yucatan peninsula is brushing the outer edge of the system, but the storm is still expected to make landfall as a major Hurricane late Wednesday night near Tampa Bay. If there is not a meaningful shift south in the storm’s path in the next 24 hours, a devastating storm surge of 10-15 feet is forecast for Tampa Bay and will likely cause widespread damage to the port and numerous terminals in the area, not to mention the millions of homes and businesses. Fuel terminals in the area already are shut down as operators race to protect the facilities before evacuating themselves. Since the storm’s path is staying well to the south and east of the Gulf of Mexico oil production and refining hubs, widespread supply issues will not occur. See maps below.

The Pemex Deer Park refinery reported an upset Monday that shutdown the distillation section of an aromatic concentration unit to repair a leak. No word if other units were forced to slow run rates as a result.