Hurricane Isaias: two counts of Gulf oil shut in, 500,000 barrels or 1.28 million, and why they differ

Two numbers for the same hurricane are circulating tonight, and they are far apart. CNBC reported that oil companies had shut in about 500,000 barrels a day, or 25% of Gulf of Mexico production, as Hurricane Isaias heads for the northern Gulf Coast. OilPrice.com reported 1.28 million barrels a day, or 62.89% of current Gulf oil output, from the federal offshore survey of operator reports submitted by 11 a.m. CDT Thursday.

Why the two counts differ

Divide each shut-in volume by its percentage and you get the same base. 500,000 divided by 0.25 is 2.0 million barrels a day. 1.28 million divided by 0.6289 is about 2.04 million. The two outlets are describing the same Gulf, measured at different moments.

OilPrice adds the detail that explains the gap. Two days earlier the survey showed 185,120 barrels a day offline, based on a single company's report. Thursday's survey included 12 companies. So the jump from under 10% to more than 60% reflects both operators evacuating and more operators reporting. We could not reach the regulator's own survey page this evening, so we are attributing the 1.28 million figure to OilPrice, and the agency's next update is due Friday afternoon, according to that report. The 500,000 figure is the older of the two, and we would treat it as a floor.

OilPrice also reported that 121 of the Gulf's 371 manned production platforms had been evacuated (32.61%), and that the survey said any platform damage would keep volumes offline longer than the routine inspections for undamaged facilities.

The storm itself

The National Hurricane Center said in its 4 p.m. CDT advisory that Isaias had maximum sustained winds near 100 mph, was about 325 miles south of the mouth of the Mississippi, and was expected to make landfall on the U.S. northern Gulf Coast late Friday or early Saturday. A hurricane warning covers Ocean Springs, Mississippi, to the Bay/Gulf County line in Florida, and a storm surge warning runs from the mouth of the Mississippi to the Suwannee River. The center said additional strengthening was expected through early Friday.

What it did to prices

CNBC reported Brent futures gained 4% to close at $104.28 a barrel and West Texas Intermediate gained 3.6%, to $91.49 on CNBC's figure. Hurricane risk was one of two drivers. The other was a week of Iranian attacks on tankers near the Strait of Hormuz, which CNBC said had hit nine vessels. Prices came off their highs after President Trump said the U.S. would not attack Iran before the November midterms. A storm shut-in is a supply loss that can end within days if platforms are undamaged, while a Hormuz disruption has no such date, which is why traders usually price the two differently. Our crude oil chart shows the move.

Who it hits

For a fuel distributor or gas station owner on the Gulf Coast, the issue this weekend is less the barrels than the physical disruption: closed roads, power outages and a surge zone that includes low-lying commercial strips. We count 7,827 independent businesses on file in Pensacola and 6,518 in Mobile, both inside or beside the warning area, led by real estate agents, restaurants and salons. Restaurants there carry perishable stock and repair shops carry customer vehicles, so the first questions are power, access and what the owner's own policy covers; that is a call to an insurer, not something we can answer here.

Drivers elsewhere should not assume pump prices move immediately. What Isaias changes at the pump depends on the damage assessment after landfall, which no outlet has yet.

Sources: National Hurricane Center advisory 9; CNBC; OilPrice.com; Chronicle business counts (independent businesses, chains excluded). Shut-in figures are as reported by the outlets named and may change with the next survey. This is market information, not investment advice.