Is no news good news, or bad?

We are still in the phase of finding out, after Rita's landfall, exactly what the level of damage will be.  Today's MMS report has 100% of the oil shut down with 81% of the platforms still evacuated and 68% of the rigs.  The 17-miles of road leading to the LOOP terminal are still underwater.  One can take the Valero comment that it will take between two weeks and a month for repairs to be completed at their refinery at face value.

Further it is not unreasonable to expect that there may be serious off-shore damage

Energy Industry analyst Jon Kilduff of FIMAT told CNN there are reports of some missing semi-submersible offshore rigs, but no details were available.

Kilduff said that, even in the best case scenario, it will take "10 to 14 days" days to return refineries to full operations. He warned that structural damage is not the only concern; refineries depend on electrical power that may have been affected by the storm.

The news from the Houston Chronicle (hat tip to Halfin) that tankers were being brought in to ensure that existing gasoline supplies get distributed is encouraging.  
The north Houston and Pasadena terminals that supply Shell stations were open again today with enough gasoline to fill up at least 30 tankers with 270,000 gallons of fuel. The tanker drivers have instructions to start with gas-needy I-45, I-10 and Highway 290.

Exxon Mobil was bringing in tanker trucks from as far away at New Jersey and Illinois. Company officials said they delivered 531,000 gallons of gasoline to 14 retail stores in the Houston area on Saturday, the equivalent of the normal daily demand for the entire Houston market.

But, and I am sorry to be a curmugeon on this, that gets us through a few days.  If the refineries are down for a month then the already weakened stock positions will get worse. And further, as the Guardian points out, the supplies are not reaching everyone:
The principal problem was a petrol shortage in an area that is usually the hub of the US oil industry. Long lines of cars formed outside Houston petrol stations yesterday. The shortage also affected salvage work. In Port Arthur, where the levees stood up to the storm surge but torrential rain left extensive flooding, a policeman said the local force was hamstrung by shortages. "We've got no gas. We're just about ready to burglarise some of the transport businesses to get some," said the officer, who did not want his name used. "We're attempting to find fuel wherever we can," a police spokeswoman, Wendy Billiot, said, confirming that petrol could be commandeered. "If it's necessary, we are considering that option."
 We should now be seeing the refineries starting to produce the heating oil for the winter. If a significant part of that possible production has to be redirected to the production of gasoline then that heating oil stock build-up will not take place.  

And in this regard I think I would rather be called wrong by suggesting that there may be a problem with heating oil this winter as a result, than sit complacently saying that there won't be a problem,  The United States is, I believe, the only nation that stores most of its fuel in crude form, rather than as refined product, and that means that if the refineries can only produce at a certain rate, if the reserve stocks aren't there then it is going to be a cold winter.  I think it might be better to know that now, that when calling the fuel oil salesman in December, only to be told that there isn't any.

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Could you comment on natural gas inventories?  Obviously we don't have an "SPR" for NG.  I'm wondering whether the potential damage to NG platforms will have a more substantial effect than lost crude production for that reason.  
The Canadian Globe and Mail had an article on this last Thursday.

You can get the actual volumes in the stocks  at the EIA Weekly Report .

You can also see, from that site, that stocks are currently in the upper range of what they need to be for this time of year.

Energy futures prices are climbing back this evening. What's known as a "short squeeze" may develop if even a little bad news not already known shows up on the wires tomorrow... sellers were hard at it on Friday and some carried through on Sunday.

NGX5 is now trading above Friday's close.

Its not a reversal, but the potential is certainly there.

Having said that, my take is that there is too-little information to make a truly informed decision right now, just like at the start of last week there was too-little known about Rita to justify the enormous spike the news of the storm caused.

I won't be too surprised if energy markets chop about a bit without selling off dramatically, until more is known... and the known is bad enough. Even normal refinery restart procedures will impact supply of products; there's bound to be more NG processing plant outages than before the storm; and off-shore production will take days to even recover to Katrina levels plus there virtually has to be some long term  or extra-long term impact from Rita to add onto the long term Katrina impact.

Futures traders don't act on perfect info; due to the leverage inherent in the instrument, they act quick, when right but especially when wrong.

I've no idea what we face tomorrow or the next day but will not be surprised to see energy futures trading higher. Few seem to expect that, and often when that's the case, price heads where its least expected to go.

Natural gas this evening is trading below the peaks reached about a month ago with Katrina.  Therefore, if the market was efficient, it is saying Rita caused no supply disruptions at all.

Of course, the market is not totally efficient, influenced by speculation, subject to changes in exchange rules and 'force majueres', and even possibly direct government intervention - which by its nature would be secret and impossible to directly prove.

Even so, I don't see NG prices headed lower without a serious recession [ps I don't trade futures].

Again, whether or not price is below the Katrina peak from late August is irrelevant at this point -- price remains in an up trend.

(overnight NGV5 is a 12.22 at present)

An uptrend is characterized by higher swing highs and higher swing lows. In order to break this up trend - in other words, to reverse it - price will have to start making lower swing lows and lower swing highs, under the 10.50 (approx) levels.

And it will have to do that leading into the winter.

We can almost guarantee that is not going to happen.

So, at best (if one doesn't like higher prices), price will find some level of support and chop around for the fall and winter; at worse, supply has been damaged to the point where it will not meet demand and we'll all be notching the heaters down.

Price currently tells us so far that the latter scenario still remains possible, if not more probable than the former.

And there you go... price held above the Katrina-induced gap (that's very, very, bullish.. frankly I'm surprised it didn't at least try to poke below that lower support line if even for part of the session yesterday) and bounced right back to where it broke down last week. Step one in price recovery complete... now it has to break above the 13.10 area and hold.

He warned that structural damage is not the only concern; refineries depend on electrical power that may have been affected by the storm.

Question for insiders... I'm an ex-chem eng that worked in the ag fuels business in the Midwest - largest processor of sweetners & ethanol. We ran our own co-gen plant to be less dependent on the utilities for energy... plus we sold back into the grid.

Are any of these refineries running co-gen? If not why not? It seems they would be able to get up and running a whole lot earlier if they controlled their own power... Plus it seems logical because if they set it up right they could process coal into electrical power then transition into syn-gas/syn-fuels as well... same feedstock.

Any thoughts?

hmmm...good question.  I remember, somewhere over the last few days, reading that one (or perhaps two) had their own power supply that would allow them, if not damaged, to get back online quickly...but I don't remember where.  I'll do some digging.  Either way, that can't happen until the flooding recedes, I would think...which might be at least a week.
So...this means 'the long emergency' is postponed, no?