2024 Atlantic Hurricane Season: Will Beryl Break Oil Prices?

Nobody is allowed to be shocked at the intensity of Hurricane Beryl today, or any other future storms that develop during the 2024 Atlantic Hurricane season for that matter.

In fact, this kind of storm was to be expected, wasn’t it?

Back in May, the National Oceanic and Atmospheric Administration (NOAA) warned us all that an above-normal hurricane season was coming this summer. According to their projections, we should see between 17 and 25 named storms, but only eight of which would generate enough wind speeds to reach hurricane status — and most of those would be major storms between a category 3 and category 5. 

However, the reason why may elude most people.

You see, NOAA scientists have noted that as a strong El Nino comes to an end, the rapid transition to La Nina conditions are conducive to an overactive Atlantic hurricane season this year. 

There were a few other reasons why things might get dicey this year, including an above-normal west African monsoon that could produce African easterly waves leading to stronger and longer-lasting Atlantic storms.

That’s where Beryl enters the picture. The second named storm of the season grew into a Category 3 hurricane last Sunday — just 42 hours after the formation of a tropical depression. 

The concern was the quickness with which this storm intensified. Beryl became the earliest Category 4 Atlantic hurricane to form, and then the earliest Category 5 as well. 

If there’s one thing that can get the oil markets to sit up and start paying attention, it’s a powerful hurricane barreling its way to the Gulf of Mexico.

So, should oil investors be worried… or excited?

Let’s take a look…

Will Beryl Break Oil Prices During the 2024 Atlantic Hurricane Season

For us, every day that oil prices go above $80 per barrel is like a day on the farm; every meal is a banquet, every paycheck a fortune.

Once Hurricane Beryl appeared on everyone’s radar, the immediate question is: What path would it take?

You know just as well as I do that the path of these storms will determine the impact on oil prices. The path that hurricanes take through the Gulf of Mexico play an incredibly significant role on how oil prices will be affected. 

For starters, roughly half of the U.S. petroleum refining capacity is located along the Gulf coast. That’s also not to mention that most of those refineries are geared towards heavy oil, which is crucial in the production of products like diesel. 

However, before any hurricane smashes into those refineries, it will have already caused a potentially major disruption in offshore production as oil platforms are evacuated. 

Make no mistake, Hurricane Beryl is a nasty storm. The fears were enough to push WTI prices well above $84 per barrel on Monday. But are those same fears warranted right now?

That’s the good news.

As you can see below, much of the offshore platforms are located between Houston and Mobile:

Now take a look at the current path forecasted for Hurricane Beryl:

If Beryl holds true to the forecasts, the U.S. oil infrastructure along the Gulf of Mexico will be spared from any major threats.

Before you start breathing a sigh of relief, let’s keep in mind that this is just the second named storm of a six-month season that started on June 1, 2024. 

But here’s the thing…

Hurricanes are a wild-card when it comes to oil price catalysts. These storms can be the black swan event that causes an overnight spike to $100/bbl, but they aren’t necessary to keep prices high this summer. 

For that, we’re already seeing the bullish draws on inventories, and a disconnect over certain demand delusions. U.S. demand is only down slightly year-over-year, and our consumption is still averaging approximately 20.5 million barrels per day over the last month. It’s not the hurricanes that will sustain higher oil prices, it’s the tightening supply/demand picture as we head down the second half of 2024. 

Until next time,

Keith Kohl

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A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.

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