Low USA Refined Product Inventories Add Risk to Hurricane Season

Low U.S. refined product inventories add risk to the 2025 hurricane season, an analysis sent to Rigzone recently by S&P Global warned.

“Despite forecasts of a less active 2025 hurricane season, tight inventories of major refined products in the United States highlight the risk of any disruption to supply,” the analysis – which was carried out by William O’Neil, a senior analyst at S&P Global Commodity Insights, and the refining insights team at S&P Global Commodity Insights – stated.

The analysis piece highlighted that U.S. stocks of gasoline and petroleum diesel are both trending at the lower end of their five year averages. It added that, while the U.S. National Oceanographic and Atmospheric Administration (NOAA) 2025 Atlantic hurricane season outlook calls for significantly less storm activity than 2024, the forecast remains elevated in historical terms.

“A new S&P Global Commodity analysis modeled the potential impacts on current product inventory levels if a major hurricane (similar to Hurricane Harvey in 2017) were to make landfall on the Gulf Coast this season and take 1.5 million barrels per day (bpd) of refining capacity offline for two weeks,” the analysis noted.

“Such an event would lower refinery supply by 360,000 bpd of gasoline, 250,000 bpd of diesel and 80,000 bpd of jet fuel,” it warned.

“Absent that production, inventories of gasoline and diesel would fall to or below the bottom of their five-year seasonal range in a scenario where supply shortages are met by a combination of stock draws and exports being rerouted to the domestic market,” it continued.

“Jet fuel inventories get tighter but do not quite approach the bottom of their historical range,” the analysis went on to state.

The analysis also warned that, “in an extreme alternate scenario, in which exports are not rerouted for domestic consumption, stocks of each product would fall even further”.

Given that the Gulf Coast contains nearly half of all U.S. refining capacity, a major disruption would reverberate through other regions, the analysis said.

“The U.S. East Coast would be especially impacted, as local refinery production only covers roughly 10-15 percent of product demand, in part due to refining capacity having shrunk by nearly 30 percent since 2019,” it added.

O’Neil stated in the analysis, “on one hand, expectations for storm activity this year are lower, but road fuel inventories are also lower.”

“This limits the ability to absorb supply shocks in the event of a major storm-related disruption,” he added.

Debnil Chowdhury, Vice President and Head of Western Hemisphere Fuels and Refining, S&P Global Commodity Insights, said in the analysis, “much of U.S. East Coast demand is met by inbound transfers from the Gulf Coast”.

“A major disruption to Gulf Coast refining would quickly be felt in Eastern demand centers and could cause product prices there to spike as the region scrambles for additional imports to meet demand,” Chowdhury added.

Rigzone has contacted American Fuel & Petrochemical Manufacturers (AFPM), the U.S. Department of Energy (DOE), and the American Petroleum Institute (API) for comment on the S&P Global analysis. At the time of writing, none of the above have responded to Rigzone.

In a statement posted on its website recently, NOAA said forecasters within its National Weather Service predict above-normal hurricane activity in the Atlantic basin this year. The organization noted in the statement that its outlook for the 2025 Atlantic hurricane season predicts a 30 percent chance of a near-normal season, a 60 percent chance of an above-normal season, and a 10 percent chance of a below-normal season. The Atlantic hurricane season runs from June 1 to November 30, NOAA pointed out in its statement.

NOAA said in the statement that the agency is forecasting a range of 13 to 19 total named storms. Of those, six to 10 are forecast to become hurricanes, including three to five major hurricanes, NOAA warned in the statement, adding that it has a 70 percent confidence in these ranges. 

In a statement released on its site on November 25, 2024, NOAA said the 2024 Atlantic hurricane season showcased above average activity, “with a record-breaking ramp up following a peak-season lull”. 

The Atlantic basin saw 18 named storms in 2024, that statement noted, adding that 11 of those were hurricanes and that five intensified to major hurricanes. Five hurricanes made landfall in the continental U.S., with two storms making landfall as major hurricanes, NOAA said in that statement.

In a statement posted on its site last month, NOAA said it predicts a “less active 2025 central Pacific hurricane season”. NOAA outlined in that statement that forecasters with its Central Pacific Hurricane Center and Climate Prediction Center see a 30 percent chance of below-normal tropical cyclone activity for the central Pacific hurricane season, a 50 percent chance of a near-normal hurricane season, and a 20 percent chance of above-normal activity.

In a media advisory sent to Rigzone by the AccuWeather team back in March, AccuWeather stated that its hurricane experts are predicting a dynamic and potentially volatile Atlantic hurricane season this year.

The AccuWeather 2025 Atlantic Hurricane Season Forecast predicts 13-18 named storms this year, with 7-10 of those storms expected to strengthen into hurricanes, that advisory noted, adding that three to five of those storms are predicted to strengthen into major hurricanes.

To contact the author, email andreas.exarheas@rigzone.com