By Virginia Harrison and Robert Daniel, MarketWatch
TEL AVIV (MarketWatch) — Crude oil futures moved up in electronic trading on Monday, as Tropical Storm Isaac threatened production in the oil-rich Gulf of Mexico.
Oil for October delivery CLV2 +1.09% advanced 1%, or 97 cents, to $97.13 a barrel on the New York Mercantile Exchange during European trading hours.
Traders were monitoring the path of Tropical Storm Isaac as it swept over the Florida Keys late Sunday.
Analysts at JBC Energy said in a report dated Monday that “Isaac marks the first hurricane so far this year and is forcing producers in the U.S. Gulf Coast to curtail production, with an estimated 330,000 barrels a day of crude oil and more than 370 million cubic feet a day of natural-gas output currently being shut down, according to the Bureau of Safety and Environmental Enforcement.”
Hurricane warning
A National Hurricane Center report at 5 a.m. U.S. Eastern Time said that “on the forecast track, 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.”
A hurricane warning is in effect, the agency said, from east of Morgan City, La., to Destin, Fla., including metropolitan New Orleans, Lake Pontchartrain and Lake Maurepas. A hurricane warning means that the storm could hit with hurricane force somewhere in the area and that the initial winds from the storm could hit within 36 hours.
“The storm is potentially disrupting supply — this has prompted buying of U.S. crude. Prices will continue to get bullish support due to the storm,” Chung Yang Ker oil analyst at Phillip Futures in Singapore said.
Among energy producers operating in the area, BP PLC BP -0.14% 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 production, the U.S. Department of Energy says. More than 40% of the nation’s refining capacity is contained in facilities located along the Gulf Coast from Mississippi to Texas.
“Oil prices will continue to be supported by this weather event. Beyond that, we have constant speculation that China and the U.S. may dish out more stimulus, also keeping prices well-supported,” Phillip Futures’ Ker said.
JBC analysts shared the sentiment about price support from talk of further monetary-stimulus measures, noting the Federal Reserve’s meeting of central bankers and economists in Jackson Hole, Wyo., later this week.
Elsewhere within energy prices, natural gas for September NGU2 +1.44% was up 5 cents, or 1.7%, to $2.75 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 and is due to reopen in two days.
Heating oil for September delivery HOU2 +1.74% was at $3.16 a gallon, up 6 cents, or 1.8%. September gasoline RBU2 +3.73% rose 12 cents, or 3.8%, to $3.20 a gallon.
Virginia Harrison is a MarketWatch reporter based in Sydney.
Robert Daniel is MarketWatch's Middle East bureau chief, based in Tel Aviv.
