Oil Falls as Companies Prepare to Resume Output After Hurricane
Posted by: Joshuah in Economics, tags: Hurricane Gustav, Oil PricesSource: Bloomberg.com
Crude oil fell to a five-month low below $106 as oil companies prepared to resume production from rigs closed by Hurricane Gustav.
Royal Dutch Shell Plc, Total SA and ConocoPhillips said they were inspecting offshore U.S. Gulf platforms today. Oil, down more than $40 from its July record, dropped as Gustav spared U.S. Gulf states the destruction caused by Hurricanes Katrina and Rita in 2005.
“The absence of serious structural damage from Gustav when the market was braced for the worst has caused prices to turn decisively downwards,” said Christopher Bellew, a senior broker at Bache Commodities Ltd. in London. “As technical selling takes hold, it looks likely we’ll breach $100.”
Crude oil for October delivery fell as low as $105.46 a barrel, down 8.7 percent from the close of Aug. 29 on the New York Mercantile Exchange and the lowest since April 4. The contract traded at $108.29 at 11:32 a.m. London time.
Today’s trading is combined with yesterday’s for settlement purposes because of the Labor Day holiday in the U.S.
Natural gas for October delivery dropped 8.7 percent to $7.25 per million British thermal units, while gasoline futures fell 12 percent to $2.6379 a gallon.
Shell, Europe’s largest oil company, plans to send a limited number of workers to its offshore platforms in the Gulf of Mexico, the company said in a statement.
Louisiana refineries shut down by Hurricane Gustav may take about 10 days to resume operations because of a lack of power, stunting fuel production at a time when regional gasoline inventories are at a 10-month low.
Exxon Mobil Corp. shut Baton Rouge, its second-largest U.S. refinery, after Gustav’s winds cut power to the Louisiana-based plant, according to an advisory on the company’s Web site.
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