Sept. 13 (UPI) -- Even though the sector was able to cope, the International Energy Agency said severe weather in the United States should serve as a warning for oil markets.
Hurricane Harvey hit the southern coast of Texas in late August and forced the closure of several refineries and some production centers in the region. Hurricane Irma made landfall in Florida earlier this week and, as the state has no refineries of its own, put significant strains on demand at the retail level.
In response to Harvey, the U.S. government traded to regional companies oil from its Strategic Petroleum Reserve to ease the strains. For Irma, the U.S. government eased some restrictions so that foreign-flagged vessels could help offset the market pressures in Florida and the surrounding areas.
The Energy Department said state officials in Florida were working with shippers to ensure gasoline gets to retail service stations in a timely fashion, though some stations are still without gasoline. As of 2:00 p.m. EDT Tuesday, the government said that four refineries in the Gulf Coast were still closed because of issues associated with Harvey, representing about 4 percent of the total U.S. refining capacity.
The International Energy Agency could have coordinated a broader release from strategic stockpiles, but said at the peak of Harvey's impact that government efforts were working. In its latest market report, the IEA said the severe weather should still serve as a warning to the oil sector.
"The oil market has coped relatively well with the challenges posed by the hurricane season thus far, but that said, now may be a good time to consider steps to mitigate the impact of future severe-weather events," its report read. "This could encompass reviewing the robustness of the Gulf Coast energy infrastructure, including production facilities, refineries, crude and product storage capacity, pipelines and marine infrastructure, and what measures can be taken to minimize disruptions to port operations."
Meanwhile, supply-side strains over the last few years have left oil prices at about half what they were three years ago and traders have been watching the level of crude oil stocks held by members of the Organization for Economic Cooperation and Development, which remain above the five-year average and seasonal trends, for signs of market recovery.
The IEA, however, said the surplus during the U.S. hurricane season provided some market relief because commercial stockpiles were already at comfortable levels.
"This was a good thing because the estimated loss of refinery output in September of about 1.6 million barrels per day has only partially been offset by lower demand," it said.