Oil falls to 13-week low on signs storm to miss Gulf facilities

Tuesday, August 5, 2008 at 12:40am
Crude oil fell $3.69 a barrel Monday, the lowest close since May 5. Bloomberg News

Crude oil fell to a 13-week low amid speculation that Tropical Storm Edouard will miss most offshore oil facilities as it approaches the coast of Texas.

Futures fell as much as $5.60 a barrel, shrugging off port closings and rig evacuations in the Gulf, a threat to oil supplies from Iran and a fire at Valero Energy Corp.’s Houston refinery. Edouard, which may become a hurricane today, was on a course to make landfall in Texas this morning.

“A market that can’t rally on bullish news is a bear market,” said Tim Evans, an energy analyst for Citi Futures Perspective in New York. “We’re just seeing disappointment that for all of the tropical-storm news, the talk of Iran and Valero’s explosion, all of these bullish stories are not pushing the price higher.”

Crude oil for September delivery fell $3.69, or 3 percent, to settle at $121.41 a barrel on the New York Mercantile Exchange, the lowest close since May 5. New York oil futures have slipped more than $25 a barrel, or 18 percent, from the record $147.27 on July 11 amid lower U.S. fuel demand.

Oil also fell because the Organization of Petroleum Exporting Countries’ crude-oil production advanced for a third month on higher Saudi Arabian output, according to a Reuters report, and amid signs the U.S. economy was slowing, which could curtail demand.

Producers have idled less than 1 percent of oil output and 7.2 percent of natural gas production in the Gulf of Mexico because of Tropical Storm Edouard, the U.S. Minerals Management Service said.

Apache Corp. halted 8,600 barrels a day of oil production and 130 million cubic feet a day of natural gas output today as it evacuated 110 workers from platforms off the coast of Louisiana because of the storm.

“A lot of the fear about something really affecting those rigs appears to have slackened,” said Gene McGillian, an analyst at Tradition Energy in Stamford, Conn. “The threat is that there’s a large enough amount of rainfall that those refineries could be affected for a while.”

Edouard may pass close to Exxon Mobil’s Baytown oil refinery as well as BP’s Texas City plant.

“It doesn’t look like it’s a big deal yet,” Peter Beutel, president of Connecticut-based Cameron Hanover Inc., said in a radio interview. “It doesn’t look especially strong right now and refineries aren’t producing all-out in any event.”

U.S. refineries ran at 87.2 percent of capacity in the week ended July 25, down 6.5 percentage points from a year earlier, as high prices of crude oil and declining gasoline demand cut refining margins.

—Bloomberg News

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By: pandabear on 12/31/69 at 7:00

Oh, gosh, the storm, the market,...they increased output...! Come on. As a fellow American, aren't you sick of this being pulled around like a puppet. It's not just the towel heads, it's our own greedy kind. Let's get off this stupid fossel stuff and use the sun, wind, etc. Let's get some dignity back.

By: girliegirl on 12/31/69 at 7:00

Panda, all of our school buses run on oil products. All of our plastic products are made from oil. OMG, dude, get a clue. I realize your dad isn't a chemical engineer, but mine is. "We're so on the tit, we ain't ever gettin' outta this one." As stated in the Houston Chronicle last week.

By: girliegirl on 12/31/69 at 7:00

It takes over a $1 MILLION per windmill to get that sucker up and running. While Obama made $40 Million last year, I did not. But I would LIKE to own a windmill, if you're buyin'. :-)

By: girliegirl on 12/31/69 at 7:00

From USA Today, July 29th:Fuel and energy costs are rising so quickly for the USA's public school districts that nearly one in seven is considering cutting back to four-day weeks this fall. One in four is considering limits on athletics and other extracurricular activities, and nearly one in three is eliminating teaching jobs.In the first detailed look at how fuel costs are affecting schools, a survey by the American Association of School Administrators (AASA) finds 99% of superintendents contacted say they're feeling the pinch — and 77% say they're not getting any help from their state.

By: capt4chris on 12/31/69 at 7:00

Of course there are going to be area's in our country that will rely on oil.But there are always areas that we can ALL be more responsible with things that affect our oil use. It starts on an individual level and goes up from there. That's a way that we can EACH help to make a difference. No matter how small.We're being taken advantage as a country with how fast oil prices have gone up and Americans should not accept that. Where has our pride gone?Our country has become so spoiled that it won't make the changes that will make a difference. We've lost the resolve that earlier Americans had that made us such a successful, young country. That they would do what they'd have to in order to show that they wouldn't take it anymore. Even if it was going to be tough.