Oil prices fall as Isaac hits refinery demand
NEW YORK — Oil prices fell Monday as Tropical Storm Isaac threatened oil and gas operations in the US Gulf of Mexico, forcing refinery shutdowns that lowered demand for crude.
The price of West Texas Intermediate (WTI) light sweet crude for October delivery closed at $95.47 a barrel, down 68 cents from Friday’s close and reversing earlier, much sharper gains.
London’s financial markets were closed for a public holiday, but in electronic trading Brent North Sea crude for delivery in October slumped $1.25 to settle at $112.26 a barrel.
Crude futures prices earlier had been boosted by the shutdown and evacuation of personnel from oil rigs in the US Gulf of Mexico. But as Isaac drew closer to the heart of the US oil industry, market worries eased about its impact.
Concerns over the storm are “fading,” said John Kilduff, an analyst at Again Capital.
“It is not big enough to cause major damage to the energy infrastructure,” Kilduff said.
Isaac, packing sustained winds of 65 miles (100 kilometers) per hour, was likely to hit hurricane force before reaching the northern Gulf coast, the National Hurricane Center said.
The Bureau of Safety and Environmental Enforcement said that about 78 percent of the daily oil production the Gulf had been shut in.
Andy Lipow at Lipow Oil Associates said four refineries were shutting down with a combined capacity of 1.1 million barrels.
“Twelve refineries representing 16 percent of the nation’s refining capacity… are in the path of the storm.”
“That is why you are seeing crude oil prices down but product prices rallying,” he said.
“Brent is falling with sympathy to the WTI,” he added.
But Jim Ritterbusch, at Ritterbusch and Associates, said that scenario was unlikely.
Elsewhere in the oil market, Venezuelan firefighters continued to battle Monday to extinguish a devastating fire at the country’s main oil refinery that has killed at least 48 people.
Venezuelan President Hugo Chavez declared three days of national mourning and promised an investigation into Saturday’s explosion and fire at the country’s Amuay refinery after a suspected gas leak.