Oil Prices Calm As Hurricane Rita Mostly Spares US Gulf Production
London, Sept 26 (AFP) Sep 26, 2005
Oil prices steadied on Monday amid relief that key oil facilities in the southern United States had mostly escaped severe damage from Hurricane Rita over the weekend, dealers said.
Rita swirled through the Gulf of Mexico over the weekend, creating less havoc than expected, which led to an initial fall in oil prices and a positive reaction on global stock markets on Monday. The US dollar also firmed against major rivals.
US President George W. Bush, meanwhile, sought to reassure Americans alarmed by sky-high gasoline prices that he was taking steps to limit the impact of Hurricanes Katrina and Rita on prices at the pump.
New York's main contract, light sweet crude for delivery in November, gained 16 cents to 64.35 dollars per barrel in early trading.
In London, the price of Brent North Sea crude for November delivery increased 23 cents to 62.67 dollars per barrel.
Oil markets on both sides of the Atlantic were open on Sunday for an extended trading session to absorb the full impact of Rita over the weekend - during which prices fell.
The retreat continued Monday morning, but later in the day, prices rebounded.
Barclays Capital analyst Kevin Norrish said: "The initial market reaction (was) underestimating the cumulative impact of lost refinery production from Katrina and Rita in our view."
"100 percent of US Gulf output is currently shut-in and the amount of lost production since Katrina now stands at 33.3 million barrels."
The main area of concern for refineries was in Port Arthur in Texas.
Valero Energy Corp reported "significant damage" to its 250,000 barrels per day (bpd) refinery which could take two weeks to a month to repair, Norrish said.
Meanwhile, French oil giant Total said it would take two weeks to a month to restart its 175,000 bpd refinery in the same city.
Anglo-Dutch energy giant Royal Dutch Shell reported wind damage at one of its Gulf Coast refineries after the passing of Rita. Shell said its 285,000 bpd Motiva Port Arthur refinery in Texas had been affected by wind damage.
The Shell Deer Park refinery and chemical plant near Houston, which has a capacity of 334,000 bpd, had "minor damage".
Anglo-Australian resources giant BHP Billiton said meanwhile that its Typhoon platform was severely damaged.
The offshore oil platform - located 165 miles (265 kilometres) south of New Orleans, at a depth of around 2,000 feet (600 metres) - has an output of 40,000 barrels of oil and 1.7 million cubic metres of gas per day.
British energy giant BP said, however, that its Gulf installations were largely unaffected.
Rita's path through the US Gulf inflicted far less damage than Hurricane Katrina, which tore through the region on August 29, pushing oil prices to historic highs and devastating the city of New Orleans.
Some 81 percent of 819 platforms and 69 percent of 134 rigs operating in the Gulf of Mexico were evacuated before the storm, which struck the US states of Texas and Louisiana on Saturday, the US Minerals Management Servicesaid.
The shutdown represents a loss of 1.5 million barrels of crude a day.
About 80.5 percent of natural gas production in the area was also halted, according to the MMS.
The network of refineries off the coast of Texas represent some 25 percent of US refining capacity.
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