Oil Set for First Weekly Drop Since July as Gulf Output R
Oil headed for the first weekly decline since July in New York as producers worked to restore Gulf of Mexico output and refiners prepared to resume operations after Hurricane Isaac passed.
Futures were little changed after dropping to the lowest close in two weeks yesterday. Companies including BP Plc (BP/) and Chevron Corp. (CVX) said they are assessing offshore facilities before returning workers. Isaac was downgraded to a tropical depression after pounding the New Orleans area on the seventh anniversary of Hurricane Katrina. Federal Reserve Chairman Ben S. Bernanke is scheduled to speak today at a symposium where in 2010 he foreshadowed economic stimulus measures by the bank.
“Oil went up and came back very quickly because the U.S. was prepared for the hurricane,” said Jonathan Barratt, the chief executive officer of Barratt’s Bulletin, a commodity newsletter in Sydney who predicts New York crude has support at $94.50 a barrel. “It’s going to have to be bigger than Katrina to have an impact. We’ll see what Bernanke has to say.” Oil for October delivery was at $94.79 a barrel, up 17 cents, in electronic trading on the New York Mercantile Exchange at 3:12 p.m. Singapore time. The contract yesterday dropped 0.9 percent to $94.62, the lowest close since Aug. 15. Prices are down 1.4 percent this week, the first weekly decline since July 27. Futures have gained 7.7 percent this month.
Brent oil for October settlement rose 24 cents to $112.89 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to West Texas Intermediate was at $18.07, from $18.03 yesterday.
Oil in New York has technical support along the middle Bollinger Band on the daily chart, at about $92.89 a barrel today, according to data compiled by Bloomberg. Futures rebounded from this indicator about four weeks ago. Buy orders tend to be clustered near chart-support levels.
Isaac was about 95 miles (150 kilometers) south-southwest of Little Rock, Arkansas, the National Hurricane Center said in an 11 p.m. New York time advisory yesterday. The storm, which made landfall as a hurricane on Aug. 28, was moving north at 10 miles per hour, with maximum sustained winds of 30 mph.
Companies halted 95 percent of U.S. oil production in the Gulf and 73 percent of natural-gas output, the Bureau of Safety and Environmental Enforcement said yesterday.
Eni SpA may restart production in the Gulf today if an inspection shows there was no damage to assets, according to the company. Anadarko Petroleum Corp. said it expects to start restaffing locations in the central Gulf today and the eastern Gulf tomorrow. Royal Dutch Shell Plc plans to begin begin redeploying personnel and starting operations today.
Four oil refineries on the U.S. Gulf Coast, capable of processing 882,000 barrels a day of crude and representing 5.1 percent of the country’s capacity, remained shut after Isaac passed.
Exxon Mobil Corp. has begun returning the Baton Rouge refinery in Louisiana to normal operations, the company said on a community hotline. It has also begun the startup process at the Chalmette plant, it said. The two sites can process a combined 704,200 barrels a day of crude.
Placid Refining Co. LLC started its 59,000 barrel-a-day Port Allen, Louisiana, refinery early yesterday, according to a statement from the company.
Hurricane Katrina damaged oil rigs and refineries in the Gulf of Mexico in 2005. The storm’s waters also broke through levees, leaving 80 percent of New Orleans underwater and more than 1,800 people dead.
Gasoline for September delivery was at $3.08 a gallon, down 0.1 percent, on Nymex. The contract reached $3.205 on Aug. 27, the highest intraday level in four months. The September future expires today and the more-active October was at $2.9098.
The motor fuel gained earlier this week on concern that Isaac and an Aug. 25 fire at Petroleos de Venezuela SA’s Amuay refinery, the country’s largest, would disrupt supplies. The company planned to finish cooling the area affected as early as yesterday and start resuming operations, according to Oil Minister Rafael Ramirez.
Fed Chairman Bernanke is scheduled to speak today in Jackson Hole, Wyoming. Policy makers have said they are prepared to provide new stimulus “fairly soon” unless there is evidence of “substantial and sustainable” improvement in the recovery, according to the minutes of the Federal Open Market Committee’s meeting that ended Aug. 1. The group is set to meet in September.
Crude in New York may decline next week on speculation that Gulf of Mexico output and refinery operations will quickly resume after Hurricane Isaac, a Bloomberg survey showed.
Seventeen of 29 analysts, or 59 percent, forecast prices will decrease through Sept. 7. Eight respondents, or 28 percent, predicted that futures will increase and four said there will be little change in prices. Last week, 57 percent of analysts projected an increase.
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