Heart of refinery sector on path of Tropical Storm Isaac
By Claudia Assis and Virginia Harrison, MarketWatch
SAN FRANCISCO (MarketWatch) — Crude-oil futures reversed course Monday, trading lower after early gains, and gasoline futures rallied as Tropical Storm Isaac threatened the heart of the refinery industry in the Gulf of Mexico.
Crude for October delivery CLV2 -1.23% retreated 93 cents, or 1%, to $95.20 a barrel on the New York Mercantile Exchange.
It earlier traded as high as $97.72 a barrel.
A trade in the red would be oil’s third consecutive loss. The commodity traded at four-month highs in the early part of last week.
Gasoline for September delivery RBU2 +1.86% rose 66 cents, of 2.2%, to $3.14 a gallon.
Tropical Storm Isaac swept over the Florida Keys late Sunday and, in a change of path, veered westward toward the heart of the Gulf of Mexico. It was expected to make landfall in the early hours on Wednesday in Louisiana.
“This change in path has caused 6.5% of platforms and 10.5% of rigs to be evacuated in the Gulf of Mexico, with 24% of oil production taken offline” — 333,000 barrels a day, according to Matt Smith, analyst with Summit Energy.
“The significance of this change in course is not only because of the threat to rigs and platforms, but also because the region is home to 44% of U.S. refining capacity,” he said said in a note to clients.
Hurricane warning
A National Hurricane Center report said that “a turn toward the northwest is expected by Tuesday. ... The center of Isaac will move over the eastern Gulf of Mexico today and approach the northern Gulf Coast in the hurricane warning area on Tuesday.”
Among energy producers operating in the area, BP PLC BP +0.37% UK:BP -0.20% was evacuating all crew members from its Thunder Horse platform, and other offshore facilities in the Mississippi Canyon, including Na Kika, Horn Mountain and Marlin, and had “temporarily suspended oil and natural gas production there,” BP spokesman Arturo Silva emailed Saturday afternoon.
The Gulf of Mexico accounts for 23% of total U.S. crude-oil production and 7% of natural-gas output, according to the U.S. Department of Energy. More than 40% of the nation’s refining capacity is contained in facilities located along the Gulf Coast, from Mississippi to Texas.
Elsewhere within energy prices, natural gas for September NGU2 -1.26% gained 2 cents, or 0.6%, to $2.72 per million British thermal units.
A gas leak triggered a major explosion in Venezuela’s Amuay refinery on Saturday, with Reuters reporting 39 people dead and dozens injured. The facility was shut down but is due to reopen in two days.
Heating oil for September delivery HOU2 +0.11% advanced less than 1 cent, or 0.2%, at $3.13 a gallon.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Virginia Harrison is a MarketWatch reporter based in Sydney. Robert Daniel in Tel Aviv contributed to this report.
