Oil prices rise as Hurricane Isaac curbs production
Crude oil for October delivery rose 34 cents, or 0.4 percent, to $95.81 a barrel at 11:30 a.m. on the New York Mercantile Exchange. The contract climbed to $96.54 earlier. Prices are up 12 percent from a year ago.
Brent oil for October settlement dropped 10 cents to $112.16 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate oil traded in New York was $16.35, down from $16.79 yesterday.
Isaac’s center was about 80 miles (129 kilometers) south- southeast of the mouth of the Mississippi River, with top winds of 70 miles per hour (mph), the National Hurricane Center said in an advisory at 10 a.m. local time.
That’s four mph less than hurricane strength. It’s moving northwest toward landfall late today or early tomorrow in southern Louisiana.
Futures advanced as much as 1.1 percent after the Bureau of Safety and Environmental Enforcement reported yesterday that 78 percent of crude production from the Gulf has been shut in as Isaac approaches. U.S. crude stockpiles probably dropped 1.75 million barrels last week, according to a Bloomberg survey before tomorrow’s Energy Department report.
“It’s hard to sell off this market with a storm heading for the Louisiana coast,” said Addison Armstrong, director of market research at Tradition Energy in Stamford, Connecticut. “We’re also expecting tomorrow’s report to show a fairly large inventory drop. These two factors will probably keep the market higher today.”
President Barack Obama said he’s ordered the Federal Government to do “everything possible” to help those in the path of Isaac. He called on Gulf Coast residents to be cautious.
“We’re dealing with a big storm,” Obama said in remarks from the White House. “Now’s not the time to tempt fate. You need to take this seriously.”
The president earlier declared an emergency for Louisiana, authorising agencies to coordinate relief efforts. He said the Federal Emergency Management Agency has been in the Gulf region for more than a week.
“We’ve moved to wait-and-see mode,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “We are now waiting to see if there’s going to be anything unexpected with Isaac, whether it is stronger or weaker.”
than expected and whether it moves on a different path than forecast.”
U.S. crude oil stockpiles may fall for a fifth week, the longest run of declines since July 2011, according to the median of 12 analyst estimates before tomorrow’s report. The decrease would leave supplies at the lowest level since March 23.
Gasoline supplies may have dropped 1.45 million barrels, and inventories of distillate fuel, a category that includes diesel and heating oil, probably rose 200,000 barrels, according to the survey.
The industry-funded American Petroleum Institute will publish its supply report at 4:30 p.m. in Washington.
“The crude oil and gasoline markets may get a liftoff tomorrow if the numbers come in as expected,” Evans said. “We’re expecting to see at least moderate declines in both crude oil and gasoline supplies.”
Gasoline for September delivery fell 4.82 cents, or 1.5 percent, to $3.1066 a gallon on the Nymex. Futures settled at $3.1548 yesterday, the highest level since April 30, as U.S. Gulf Coast refineries shut with the approach of Isaac and a fire in Venezuela closed the country’s largest refinery.
Firefighters were working to contain the last fire at the Amuay refinery, where a gas leak caused an explosion Aug. 25. Amuay, which can process 645,000 barrels a day, forms part of the Paraguana complex 240 miles west of Caracas.
Damage was limited to the storage tanks and Venezuela has enough gasoline inventories to meet all commitments, the country’s Oil Minister, Rafael Ramirez, said on television.