Oil prices up after Katrina damage report
NEW YORK -- Crude oil prices edged higher yesterday after a report said 60 percent of oil production in the Gulf of Mexico remains shut due to damage by Hurricane Katrina.
Light, sweet crude for October delivery initially dropped yesterday more than $1 after US petroleum data showed inventories shrank slightly less than traders expected. The contract then rose to gain 12 cents on the New York Mercantile Exchange.
Gasoline futures settled slightly higher at $2.0222 a gallon, while heating oil fell more than 3 cents to settle at $1.9296.
Brent crude on the International Petroleum Exchange rose 19 cents to close at $63.08.
The market remains jittery as traders assess the damage to Gulf oil refineries and production sites and how that will affect US retail prices and demand.
''The market is treading water right now," said Tom Kloza, an analyst at Wall, N.J.-based Oil Price Information Service. ''I'm not convinced that we know about the biggest factor of all -- gasoline demand."
The Energy Information Administration said yesterday the average price of retail gasoline rose 46 cents to $3.07 a gallon as of Monday, but indicated that retail gasoline prices may be peaking.
More than 60 percent of oil production in the Gulf, or 901,726 barrels a day, was shut in, or closed, as of midday yesterday, up from about 57 percent Wednesday, according to the Minerals Management Service. Shut-in gas production remained steady at about 40 percent.
MMS said the shut-in figures did not change due to an actual decrease in production, however, but because a company that had previously not been able to do so reported production data.
Since Aug. 30, in the aftermath of Hurricane Katrina, shut-in oil has steadily decreased from more than 95 percent, while shut-in gasoline has fallen from 88 percent.
US crude oil inventories fell 6.4 million barrels in the week ending Sept. 2, according to the Department of Energy's weekly petroleum inventories report released yesterday -- a day late because of the Labor Day holiday. At 315 million barrels, crude inventories are still 13 percent above year-ago levels.
Gasoline inventories dropped 4.3 million barrels to 190.1 million, 9 percent lower than a year ago. Distillate fuel inventories -- which include heating oil -- fell 800,000 barrels to 134.4 million, 3 percent higher than a year ago.
''Especially encouraging were the distillate numbers . . . we're going to have enough oil to weather the storm," said Phil Flynn, an analyst at Alaron Trading in Chicago.
