Your web browser is out of date. Update your browser for more security,
speed and the best experience on this site.
You have successfully subscribed to the newsletter!
08 27, 2012 by Reuters
Brent crude oil futures reversed early gains and fell toward $112 a barrel on Monday as Tropical Storm Isaac shuttered refineries on the U.S. Gulf Coast, reducing demand for crude.
Traders were also eyeing the possibility of western governments releasing strategic oil reserves to help calm prices, with some analysts suggesting the storm could provide the trigger.
While crude prices fell by as much as $2 a barrel, gasoline and diesel prices both jumped higher due to the storm's threat to the Gulf Coast, home to almost 45 percent of refining capacity in the world's largest oil consumer.
Tropical Storm Isaac churned across the Gulf of Mexico on Monday and headed for the Louisiana refining hub, prompting U.S. energy companies to start shutting refineries ahead of the storm and raising prospects for a jump in crude oil stocks. The storm is expected to make landfall late on Tuesday or early Wednesday.
Brent crude futures were down by $1.32 at $112.27 a barrel by 2:11 pm EDT (1811 GMT) after earlier rising as high $115.50 a barrel. Traders said they were watching the front-month contract's 200-day moving average of $111.43, a key technical indicator.
U.S. crude was down by 84 cents at $95.31 a barrel, having earlier hit a session high of $97.72. RBOB gasoline futures were up more than 3 percent to near $3.18 a gallon, touching the highest level since late April.
"Traders realize that there is more refining capacity at risk from this storm, and that the risk is also to oil consumption," said analyst Tim Evans at Citi Futures Perspective in New York.
"That's why we see today that crude prices are off and near-term gasoline prices are rising. It is similar to the price action we had ahead of Hurricane Katrina."
Trade was relatively light due to a public holiday in London, with volumes for both major crude benchmarks almost a third below the 30-day average.
Isaac is forecast to become a hurricane on Tuesday. In its latest advisory, the National Hurricane Center (NHC) said the storm was not expected to strengthen beyond Category 1, the weakest type on the five-step Saffir-Simpson scale of hurricane intensity.
The NHC had earlier said Isaac could become a Category 2 storm.
Oil prices have risen nearly 30 percent since June with international sanctions hitting Iranian exports and maintenance affecting North Sea oil flows.
Reuters reported that the White House was "dusting off" old plans for a possible release on fears that rising oil prices could undermine the effect of sanctions on Iran.
"With refineries shutting down along the U.S. Gulf Coast, traders are weighing this up and seeing there may be a glut of crude oil in the market," said Carl Larry, analyst at OilOutlooks in New York.
"Isaac is also adding to talk of a possible release from the Strategic Petroleum Reserve, so traders are cautious at these levels after a two-month long rally," he added.
The International Energy Agency, whose chief recently dismissed the need for a coordinated release, is now thought to have agreed to the idea, an industry journal said on Friday.
Over 1 million barrels per day of refining capacity is also in the process of shutting down on the U.S. Gulf Coast, companies and government sources said.
Marathon Petroleum Corp (MPC.N) said on Monday it was initiating the shutdown of its 490,000 barrels-per-day (bpd) refinery in Garyville, Louisiana, the fourth largest in the United States.
In another indication that regional crude stocks could rise, a fire burned for a third day at Venezuela's biggest refinery on Monday, raising doubts about a speedy restart to operations.
U.S. oil production is lower, however, as U.S. energy companies shut offshore rigs in the Gulf of Mexico, home to 23 percent of total U.S. production.
More than 78 percent of Gulf of Mexico oil production was shut-in on Monday, the U.S. Bureau of Safety and Environmental Enforcement said, up from 24 percent the previous day.
Earlier on Monday, oil prices rose to a daily high of $115.50 a barrel partly on hints of another round of monetary stimulus by the U.S. Federal Reserve ahead of a meeting with Fed Chairman Ben Bernanke later this week.
Oil prices fell from highs after German business sentiment dropped for a fourth month in a row in August to reach its lowest level since March 2010, stoking concerns about the impact of the euro zone crisis on Europe's largest economy.
Jan 20, 2022 | LMOGA
Dec 13, 2021 | LMOGA
Nov 17, 2021 | LMOGA
Nov 02, 2021 | LMOGA