Hurricane Michael, one of the most powerful U.S. hurricanes on record, is delivering a devastating punch to the Southeastern United States and the U.S. stock market, delivering a punch to the nation’s portfolios. Oil prices followed stocks lower and any fear that Gulf of Mexico Oil infrastructure would be damaged went away with the wind.

Even as the Bureau of Safety and Environmental Enforcement (BSEE)  reported that 42.3 percent of the oil production and 31.7% of the natural gas production was shut- in the Gulf of Mexico, already oil companies are starting to try to bring that production on line. That does not mean that Hurricane Michael is over. It is not by a longshot. The oil market is trying to balance the short-term demand destruction impact from the storm to the longer-term demand bump when we will have to spend billions of dollars to rebuild. Yet, the market can’t focus on that just yet with a plunging stock market raising fears about demand and getting blindsided with a bearish American Petroleum Institute (API) supply report. It also is fearing the drop in stocks that overshadowed looking out beyond the storm.

What? Did all the refineries shut down? The API looks like they did as they reported a 9.75-million-barrel crude supply increase, the biggest increase since February of 2017. Now part of that increase might be refinery maintenance and restrained pipeline capacity going out of Cushing, Oklahoma. The API reported that supply in Cushing surged by 2.3 million barrels, the largest increase since  March 2018. Yet in the products we saw refiners lose ground on distillate supply. The API reported a 3.5-million-barrel drop in that category, the biggest fall since 2018. Refiners have been working hard trying to beef up those stocks but are now falling behind. This is going to be a larger concern as winter is approaching. In contrast, gasoline supply increased by 3.4 million barrels. Gasoline will see demand drop short term because of the storm.