US raises tropical storm forecast: Update

Adds Colorado State University forecast.

Shifting weather patterns have increased the chances for named storms in the US Gulf of Mexico as peak hurricane season arrives, according to federal meteorologists.

A more active hurricane season could stir up more of the disruptions that backed up fuel exports and sent US Gulf coast benchmark medium, sour crude prices to a record premium to light sweet crude in late July.

The National Oceanographic and Atmospheric Administration (NOAA) now forecasts a 45pc likelihood of an above-normal Atlantic Hurricane season, up from 30pc in an initial May forecast. The new outlook increased the number of named storms to 10 to 17, including five to nine hurricanes and up to four hurricanes with winds stronger than 111 mph.

The outlook increased as a period of unusually warm Pacific ocean water and other associated weather events, called El Nino, subsided. Those conditions have eased as the Gulf of Mexico enters the peak season for hurricane activity, August to November.

"El Nino typically suppresses Atlantic hurricane activity," said Gerry Bell, lead seasonal hurricane forecaster at NOAA's Climate Prediction Center. "Now that it is gone, we could see a busier season ahead."

Colorado State University meteorologists this week left their outlook for the season unchanged, with predictions for a near-average season with 12 storms — six of those hurricanes including two major hurricanes. The US Atlantic and Gulf coasts each had 31pc probabilities for major hurricane landfall, according to university researchers. NOAA does not give landfall probabilities.

The 2019 hurricane season has so far seen two named storms and one hurricane. Hurricane Barry made landfall in Louisiana as a category 1 storm on 13 July. The storm emptied 73pc, or 1.4mn b/d, of Gulf of Mexico oil production activity and 62pc, or 1.71 Bcf/d, of natural gas capacity at its peak as it churned through the gulf.

Booming on-shore shale production has muted the impact of hurricanes on US and international light, sweet crude prices. But Opec-organized production constraints and US sanctions on Iran and Venezuela have tightened supplies for the normally discounted sour crude market. Medium sour benchmark Mars reached a $2.10/bl premium to Light Louisiana Sweet on 23 July and averaged a 58¢/bl premium in the seven days ended 25 July, based on Argus assessments. It was the highest premium since Argus began Mars assessments in 1999.

Storms have also disrupted loading from US Gulf coast crude and product export infrastructure. Gulf coast gasoline and distillate inventories increased by a combined 4.3mn bl in the week Barry made landfall, compared to a five-year average increase for the week of 427,000 bl.