NEW YORK: Crude oil may rise on concern Hurricane Rita will damage production platforms in the Gulf of Mexico and refineries in Texas, a Bloomberg survey showed.
Thirty-three of 53 analysts and strategists surveyed, or 62%, said oil will rise next week. Eleven, or 21%, said prices will fall and 9 forecast little change.
Gulf oil production has almost completely shut because of Rita and Hurricane Katrina, which hit Louisiana and Mississippi August 29, the US Minerals Management Service said on Friday. Producers such as Exxon Mobil Corp and Chevron Corp shut oil rigs and at least 29% of US refining capacity has closed.
“Concern that Rita could inflict further injury to an already wounded US oil industry is likely to occupy oil markets next week,’’ said Gerard Burg, an economist with Australia National Bank Ltd in Melbourne.
Rita, with winds of 125mph (201km per hour), weakened on Friday to a Category 3 storm on the five-step Saffir-Simpson scale.
The hurricane will shut 7% of Gulf oil output and 12% of the region’s natural-gas production for as long as a month, according to Kinetic Analysis Corp, a Savannah, Georgia-based forecaster. The company accurately predicted the amount of damage to oil and gas platforms caused by Katrina and Hurricane Ivan last year.
Chevron, Exxon, BP Plc, Anadarko Petroleum Corp and Apache Corp evacuated workers from offshore platforms this week. Exxon has about 100 structures in the Gulf supported by about 550 production workers, spokeswoman Susan Reeves said in an e-mailed statement this week.
Houston-area refineries are vulnerable to flooding and may sustain wind damage from Rita, disrupting output for weeks. Last week, 22 of 54 respondents, or 41%, said oil would rise.
Twenty-seven of the past 42 surveys have correctly forecast the market’s direction.
Exxon, Royal Dutch Shell Plc, ConocoPhillips, BP and Valero Energy Corp shut refineries in Texas in anticipation of Rita. Refineries in Texas account for 26% of US capacity, according to the US Energy Department.
Exxon closed its 557,000bpd Baytown, Texas, refinery, the nation’s largest, according to a filing with state authorities. Valero, the biggest US oil refiner, shut plants in Texas City and Houston.
About 5% of US refining capacity already was shut because of Katrina, which sent US gasoline pump prices above $3 a gallon for the first time. Oil and gasoline retreated from the all-time highs after the US and other nations tapped emergency stockpiles to make up for disruptions caused by Katrina.
The average US pump price for regular-grade gasoline fell to $2.748 a gallon on Friday, while diesel prices rose, according to the AAA, the nation’s largest motorist organisation.
Average prices on September 2 reached $3.057 a gallon, a record. Gasoline prices are now 47% higher than a year ago.
Members of the International Energy Agency agreed on September 2 to release as much as 1.28mn bpd of crude oil and 683,000bpd of refined products for a month, half of it from the US Strategic Petroleum Reserve, to help ease shortages caused by Katrina.
Some analysts said damage from Rita will be less than anticipated and that oil will fall.
“I think Rita will be less severe than anticipated, as many expect the worst, and that oil will fall on the news,’’ said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts.
The IEA said on September 15 that it won’t expand the release of emergency oil and fuel reserves after an auction of US crude oil met weak demand. – Bloomberg |
