NEW YORK: Oil prices fell on Thursday as a massive hurricane in the Gulf of Mexico made landfall in the heart of the U.S. oil industry, forcing oil rigs and refineries to shut down.
Brent crude futures for October, which expire on Friday, fell 64 cents, or 1.4%, to $45.00 a barrel by 11:32 EDT (1532 GMT). U.S. West Texas Intermediate (WTI) crude futures fell 61 cents or 1.4% to $42.78 a barrel.
The storm hit Louisiana early Thursday with 150 mile-per-hour (240 kph) winds, damaging buildings, knocking down trees and cutting power to more than 400,000 people in Louisiana and Texas. Its storm surge was less than predicted, sparing inland plants from feared flooding.
Oil producers on Tuesday had shut 1.56 million barrels per day (bpd) of crude output, or 84% of the Gulf of Mexico’s production, evacuating 310 offshore facilities.
At the same time, refiners that convert nearly 2.33 million bpd of crude oil into fuel, and account for about 12% of U.S. processing, halted operations.
“On the one hand refinery shutdowns reduced the demand for crude oil, but at the same time Gulf of Mexico production was shut in, nearly offsetting each other,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
On Wednesday, the U.S. government reported that crude oil stockpiles fell last week as exports soared the most in 18 months and refineries boosted production to the highest rate since March. Gasoline stocks also fell. [EIA/S]
“It appears that the gasoline inventory reduction was due first and foremost to increased demand – gasoline demand rose to a six-month high of around 9.2 million bpd,” Commerzbank said.
(Additional reporting by Ahmad Ghaddar in London, Sonali Paul and Koustav Samanta; editing by Jason Neely and David Gregorio)
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