July 16, 2024

Hurricane Beryl Gives a Little Bump

Hurricane Beryl delivered a bullish push for oil, but the impact should prove to be temporary.

The most obvious impact was in commercial crude oil inventories (chart ComCrdStks). Crude inventories shifted from sideways to a substantive two-week decline as Beryl approached and then came onshore in the U.S. There were no substantive shifts in other key elements (e.g. runs, exports, imports) that could explain the shift other than perhaps some precautionary crude oil inventory stockpiling at refinery sites (not captured in the data) in case Beryl delivered some crude supply disruptions.

Otherwise, not much happened. Total oil inventories saw a draw the week Beryl landed, but then moved back to its primary trend upwards (chart ToTStksSPR). However, this rising total inventory trend has neither hit levels nor is it rising at a pace that would trigger alarm or panic in the oil markets. It simply indicates that the System is experiencing a mild trend of over-supply in 2024. What would trigger panic would be a much steeper spike in inventories linked to a global recession. However, only once that becomes the market narrative, will oil prices act in a much different way than they are right now.