BLBG:Oil Drops From One-Week High On Isaac Landfall, Stockpile Gain
Oil fell from the highest closing price in a week in New York after Hurricane Isaac made landfall and a report showed inventories rose the most since May in the U.S., the world’s biggest crude consumer.
Futures slipped as much as 0.6 percent after Isaac struck the coast of southeastern Louisiana. Refinery shutdowns because of the storm have curbed crude demand, according to Goldman Sachs Group Inc. Stockpiles gained 5.5 million barrels last week, the American Petroleum Institute said yesterday. An Energy Department report today may show inventories slid 1.75 million barrels, according to a Bloomberg News survey.
“While production and imports might continue to be impacted for a couple more days after the hurricane has passed, crude demand has also been impacted,” Stefan Wieler, an analyst at Goldman in New York, said in a note e-mailed today. “The greater concern lies in the risk to refining capacity.”
Oil for October delivery declined as much as 60 cents to $95.73 a barrel in electronic trading on the New York Mercantile Exchange and was at $96 at 3:26 p.m. Sydney time. The contract yesterday climbed 0.9 percent to $96.33, the highest close since Aug. 22. Prices are 2.9 percent lower this year.
Brent oil for October settlement was at $112.53 a barrel, down 5 cents, on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was $16.54, from $16.25 yesterday.
Gulf Output
Oil in New York may extend its decline to as low as $94.55 a barrel, along the bottom of a short-term uptrend channel on the daily chart, according to data compiled by Bloomberg. This channel started from the June 28 fall to $77.28, the 2012 intraday low. Buy orders tend to be clustered near technical- support levels.
Companies halted 93 percent of oil production in the Gulf of Mexico and 67 percent of gas output as Isaac neared the coast of southeast Louisiana, the Bureau of Safety and Environmental Enforcement said. Six Louisiana refineries were shut, idling 6.7 percent of U.S. capacity, and three were running at reduced rates, data compiled by Bloomberg show.
The storm was 80 miles (130 kilometers) south-southeast of New Orleans with top winds of 80 mph, making it a Category 1 hurricane, the National Hurricane Center said in an advisory at 10 p.m. New York time. It “wobbled” to the west and was back over water again, the center said.
Oil Stockpiles
U.S. gasoline supplies decreased 2.4 million barrels last week, the API data showed. They are forecast to decline 1.45 million barrels, according to the median estimate of 12 analyst estimates in the Bloomberg survey before the Energy Department report. Distillate stockpiles, a category that includes heating oil and diesel, rose 1.4 million barrels, compared with a projected 104,000 barrel drop in the survey.
The Labor Day holiday on Sept. 3 marks the end of the U.S. summer driving season, the peak gasoline demand period. Refiners often idle processing units for maintenance in September and October as consumption of the motor fuel drops and before heating-oil use increases.
The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.
The rise in crude inventories is “a seasonal factor and we’ll start to see these builds,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney.
Venezuela Fire
Gasoline fell as much as 0.3 percent, extending yesterday’s decline, as Venezuela extinguished a fire at its biggest refinery. The country said it will allow a 24-hour cooling period before resuming the 645,000 barrels-a-day Amuay refinery after the four-day blaze and explosion that killed 48 people.
State-owned Petroleos de Venezuela SA is “in no hurry” to restart the plant and will complete an “exhaustive” revision before beginning normal operations, Oil Minister Rafael Ramirez told reporters yesterday in Falcon state near the plant.
Gasoline for September delivery was at $3.1228 a gallon, down 0.33 cents, on the New York Mercantile Exchange. The contract slid 0.9 percent yesterday after rising as high as $3.205 on Aug. 27, the highest level since April 30, amid concern the Venezuelan fire and Isaac would curb supplies.
The Group of Seven nations called on oil-producing countries to increase output and is monitoring the threats to their economies posed by high oil prices, according to a joint statement issued yesterday by the U.S. Treasury Department.
The G-7 said it’s prepared to call upon the International Energy Agency, a 28-member group of oil consuming countries, “to take appropriate action to ensure that the market is fully and timely supplied.” The IEA’s countries made available 60 million barrels of crude and oil products in June 2011 after Libyan output was disrupted by an armed uprising against Muammar Qaddafi.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
To contact the editor responsible for this story: Mike Anderson at manderson34@bloomberg.net
