Bloomberg: Oil Falls From a Record as Hurricane Weakens, Spares Platforms

By Angela Macdonald-Smith and Christian Schmollinger

Sept. 14 (Bloomberg) — Crude oil fell from a record close in New York after Hurricane Humberto spared offshore production platforms and weakened into a tropical depression as it passed over Texas into Louisiana.

There were no reports of damage to production units at three refineries that had power supplies knocked out by the storm in Port Arthur, Texas, idling 4.8 percent of U.S. capacity. Total SA’s plant will be restored by Sept. 18, according the Department of Energy’s Web site. Valero Energy Corp.’s unit will restart Sept. 16, a Texas state government Web site said. Royal Dutch Shell Plc gave no timetable.

“There’s a realization that this storm is softening and maybe it’s not going to be as bad as it could have been,” said Andrew Harrington, a commodities analyst at Australia & New Zealand Banking Group Ltd. in Sydney.

Crude oil for October delivery fell as much as 62 cents, or 0.8 percent, to $79.47 in after-hours electronic trading on the New York Mercantile Exchange. It was at $79.68 at 2:38 p.m. in Singapore.

Yesterday, the contract rose 18 cents, or 0.2 percent, to close at a record $80.09, the first time oil in New York settled above $80 a barrel. Futures touched $80.20 earlier in yesterday’s session, the highest intraday price since trading began in 1983. Prices are up 26 percent from a year ago.

Ingrid Forms

Meantime, the ninth storm of the year, Tropical Storm Ingrid, formed about 840 miles east of the Lesser Antilles, moving west-northwest at 6 mph with sustained winds of about 40 mph, the National Hurricane Center said yesterday in a report at 10 p.m. Miami time. Some strengthening is possible over the next 24 hours, the center said.

“There’s still another one building,” which may limit the price fall, ANZ’s Harrington said.

The rise in prices to a record was partly prompted by a weekly petroleum inventories report by the U.S. Energy Department, which showed oil stockpiles fell by a greater-than-expected 7.01 million barrels last week.

“Crude stocks have now fallen for three weeks in a row to lows not seen since early January,” MF Global Energy Group said in a Sept. 13 report.

Brent crude oil for November settlement was trading at $76.81 a barrel, down 31 cents, at 2:39 p.m. Singapore time. The contract yesterday slipped 4 cents to $77.12 a barrel on the London-based ICE Futures Europe Exchange.

Gasoline Gains

Gasoline for October delivery yesterday climbed 3.04 cents, or 1.5 percent, to $2.0464 a gallon in New York. It fell 0.69 cent to $2.0395 in after-hours trading at 1:02 p.m. in Singapore. Futures are up 27 percent from a year ago.

“It’s quite a bit of capacity that’s been knocked out,” said Rowan Menzies, a commodities analyst at Commodity Warrants Australia in Sydney. “Storms are the one thing around that will hold up prices.”

The November crude contract closed yesterday at $78.62, while the December contract closed at $77.50. The discount between the front-month and later contracts is a “storm-fear bulge,” Menzies said.

There were no reports from Gulf of Mexico oil and gas field operators of any lost production on the U.S. Minerals Management Service Web site.

Humberto weakened to a tropical depression over southwestern Louisiana. At 10 p.m. Thursday Houston time it was about 15 miles northwest of Natchez, Mississippi, heading northeast at about 12 mph. Sustained winds weakened to 25 mph, below the 39-mph threshold required for storm status.

Atlantic Season

The Atlantic hurricane season, which lasts from June through November, threatens oil facilities along the U.S. Gulf of Mexico coast. Prices surged in August and September 2005 after hurricanes Katrina and Rita roared through the Gulf Coast region, causing power outages, flooding and wind damage affecting more than a third of U.S. refining capacity.

The three shuttered refineries are among the top 30 in the U.S. While it may take a week to restore normal operations at the plants, there is “plenty” of fuel in storage, said Fadel Gheit yesterday, an analyst at Oppenheimer & Co. in New York.

“People are shooting first and asking questions later,” Gheit said. “That’s what’s driving prices up.”

The Organization of Petroleum Exporting Countries said Sept. 11 it would increase production by 500,000 barrels a day, less than is needed to meet a seasonal rise in demand over the Northern Hemisphere winter.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at [email protected] ; Christian Schmollinger in Singapore at [email protected]

Last Updated: September 14, 2007 02:41 EDT

http://www.bloomberg.com/apps/news?pid=20601207&sid=asMEJO2oPse8&refer=energy

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