Oil prices rise as producers assess damage from Hurricane Ida | Oil and Gas News

Although oil producers in the Gulf of Mexico shut down approximately 1.7 million barrels of crude oil production per day before the storm, the recovery of oil refineries in Louisiana in the United States may be slower.

Oil prices in New York rose slightly, as offshore prospectors assessed the damage caused by Hurricane Ida, and investors shifted their attention to the OPEC+ conference, which may increase market supply.

The price of New York futures trading was slightly higher than US$69 per barrel, after it fell 1.6% before. Although Gulf of Mexico producers shut down approximately 1.7 million barrels of crude oil production per day before the storm, Louisiana’s refineries may be slow to resume operations.

Bart Melek, head of global commodity strategy at TD Securities, said: “The market believes that unlike oil refining, Ada currently has little impact on crude oil production.” “This means that as the capacity of refineries decreases, demand for feed decreases. It may make the fear of crude oil shortage disappear.”

Gasoline futures surged by more than 4% early in the session and then gave up gains. On Sunday, the refining capacity of plants along the Mississippi River was approximately 2.11 million barrels, accounting for approximately 12% of the total in the United States.

As investors weighed the challenges posed to consumption by the resurgence of the pandemic in Asia, the United States and parts of Europe, both crude oil and gasoline were hit by trading volatility this month. At the same time, the Organization of Petroleum Exporting Countries and its partners will meet later this week and are expected to continue to increase production.

Hurricane Ida struck New Orleans and the coast of Louisiana overnight. Heavy rains and high winds cut off power to most of the area and prepared for widespread flooding. On Sunday, the storm thundered on the shore in the form of a Category 4 hurricane and reversed part of the course of the Mississippi River, pushing a wall of water inland.

After the Ada passed the Gulf of Mexico, a flyover by the US Coast Guard on Sunday afternoon showed that the Mars, Olympus and Ursa Major crude oil and natural gas platforms operated by Royal Dutch Shell were still on site.

“We expect that oil production in the region will recover faster than refining production,” Goldman Sachs Group analysts wrote in a report on Monday. They said it is too early to determine how long the refineries in the region will be closed.

If the refinery suffers severe damage or loses power and is forced to shut down for a long time, gasoline prices in the southeastern United States may rise in the coming weeks, thereby increasing price inflation for Americans.

The spot price of physical gasoline in Houston has risen nearly four years from the price of futures in New York.

European traders are ready to fill any supply gap in the Port of New York by temporarily chartering tankers.

price:

• West Texas Intermediate crude oil for October delivery rose 50 cents to 69.24 US dollars per barrel at 1:34. In the afternoon in New York.
• ICE’s October Brent crude oil price rose 59 cents to $73.29 per barrel.
• WTI fell to US$4.09 per barrel, lower than its global benchmark Brent crude oil, which is the largest discount since May 2020.
• September gasoline contract expiring on Tuesday rose 1.7% to $2.3129 per gallon
• Gasoline rose 1.5% in October to $2.1513 per gallon.

Colonial Pipeline Co. is the largest operator of fuel distribution systems in the United States. Its main network is idle from refining centers in Texas and Louisiana to customers in the eastern United States.

“For Category 4, refineries may require 4 to 6 weeks or more downtime,” said Andy Lipow, president of Lipow Oil Associates LLC in Houston.

Before Hurricane Ida on August 29, there will be a storm surge in Louisiana [File: Bloomberg]

The Ada disembarked about 60 miles (97 kilometers) south of New Orleans, raising the sea level by 16 feet (4.9 meters). The hurricane’s wind speed of 150 miles per hour is on par with the Louisiana records set by Laura in 2020 and 19th-century storms.

Related reports:

• The Port of New Orleans is still closed to all ships, and the ship’s driver reports damage to the Valero Meraux refinery dock
• Crescent Pilots reports damage to Valero and Meraux terminals
• As Hurricane Ida hit the coast, oil and gas explorers at refineries in the Gulf of Mexico and Louisiana have shut down production.
• American motorists who thought gasoline prices would ease by the end of the summer should begin to prepare for higher costs.
• The head of the Libyan National Petroleum Company was suspended awaiting investigation into whether he violated the policy, the oil minister said.