Expectations for a more severe Atlantic hurricane season than usual this year will pose an upside risk to refining margins rather than to crude prices, Goldman Sachs said on Tuesday.

“The recent refining response to low margins, and low positioning in refined products (especially for gasoline) are key reasons why we see more upside to refined product margins than to crude prices,” analysts at Goldman Sachs said in a note.

U.S. government forecasters said in May up to seven major hurricanes may form in an “extraordinary” 2024 Atlantic hurricane season beginning June 1.

Oil and gas companies in Texas were restarting operations on Tuesday after Hurricane Beryl lashed the state with intense winds, damaging property and leaving millions without power.

Beryl made landfall early on Monday near the Texancoastal town of Matagorda. Some energy firms shut operations ahead of its arrival and Texas’ largest ports and navigation channels were closed.

However, its impact on oil and gas production is expected to be minor.

Goldman Sachs said it still expects Brent prices to average $86 per barrel this quarter as OECD commercial stocks continue to be drawn down and “spreading wildfires in Alberta are already disrupting Canadian oil production.”

Brent LCOc1 was trading around $85 a barrel by 1111 GMT on Tuesday, while U.S. West Texas Intermediate (WTI) crude CLc1 was around $82.
Source: Reuters (Reporting by Brijesh Patel in Bengaluru; Editing by Bernadette Baum)