Oil prices rise while industry asseses storm damage
NEW YORK (AP) – Crude oil prices rose more than $1 a barrel Monday while the oil industry assessed damage from Hurricane Rita and traders worried that demand for heating oil could soar ahead of the winter months. The strength of the economy, showing up in continued robust demand for housing, also helped boost prices, analysts said.
Light, sweet crude rose $1.63 to settle at $65.82 on the New York Mercantile Exchange, after dropping to $62.65 earlier in the day. Gasoline futures rose more than 4 cents to $2.1292 a gallon, after falling as low as $1.94. Heating oil rose nearly 11 cents to $2.0586 a gallon. Natural gas rose nearly 12 cents to $12.44 per million British thermal unit. On London’s International Petroleum Exchange, Brent crude for November rose $1.49 to settle at $63.93.
Monday’s report from the National Association of Realtors showed that sales of previously owned homes rose in August to the second-highest level ever – suggesting that U.S. consumer demand remained firm before Katrina and Rita hit. “Maybe the economy is not hurt as much as people feared,” said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. “Tight supplies plus more demand means high prices.” He added that oil markets are also jittery over the possibility of another tropical storm hitting the Gulf coast. Hurricane season isn’t officially over until November.
Rita gave only a glancing blow to crucial oil refineries in Texas, but consumers shouldn’t expect prices at the pump to fall to pre-Katrina levels anytime soon.
“Most areas of the country will see price increases in gasoline this week,” said Tom Kloza, analyst at Oil Price Information Service in Wall, N.J. The average U.S. retail price of a gallon of unleaded gasoline was $2.80 on Monday, up from $2.75 Sunday, but below the all-time high of $3.06 on Sept. 5.
Sixteen Texas oil refineries remained shut down after the storm, and crews found significant damage to at least one in the Port Arthur area, said Energy Department spokesman Craig Stevens. These outages could lead to petroleum product shortages and further aggravate the heating oil and natural gas markets, which are usually volatile ahead of the winter months.
President Bush said Monday the government is prepared to again tap into the Strategic Petroleum Reserve to alleviate any new pain at the pump.
While preliminary assessments show little damage to most refineries in the U.S. Gulf area, a key economic aide to Bush said hundreds of thousands of jobs were at risk if the storm stunted oil production.
“There is of course the direct impact of the shutting down a part of the economy, the loss of several hundred thousand jobs and reduced energy production in the Gulf,” warned Ben Bernanke, chairman of the White House Council of Economic Advisers.
, in a speech Sunday.
Seven facilities in Port Arthur and Beaumont, Texas, and Lake Charles, Louisiana, were without power from Hurricane Rita, which left the 255,000-barrel-per-day Valero Energy Corp. plant in Port Arthur the most heavily damaged. The facility faces at least two weeks of repairs.
The International Energy Agency, the watchdog for industrialized, oil-importing countries, said it could release state-held stockpiles within the week to cushion any lost output from Rita.
IEA Executive Director Claude Mandil said Monday the agency would decide on whether a further release of state-controlled stockpiles of crude and gasoline is warranted within a week or so based on Rita’s impact.
The U.S. Minerals Management Service said Monday that 758 platforms in the Gulf remained unstaffed, up from Sunday. Oil production in the Gulf of Mexico was totally shut down, and more than 78 percent of gas output was shut. Since Katrina hit a month ago, more than 34 million barrels of oil and 163 billion cubic feet of natural gas have been lost.
Elsewhere, France’s largest oil refinery in Normandy is likely to come to a complete halt Monday as a strike over pay extends into its seventh day, oil company Total SA said.
Total said production will halt at the few units still operating at its 328,000-barrel per day refinery, which accounts for roughly 15 percent of France’s refining capacity.
Also, U.S. oil giant Chevron said it had restarted production at one of two oil platforms in Nigeria shut down last week because of threats from a southern militia, a company spokesman said. The Robertkiri facility produces 19,000 barrels of oil per day.
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Associated Press Writers Edith Balazs in Budapest, Hungary, and En-Lai Yeoh in Singapore contributed to this report.
AP-ES-09-26-05 1611EDT