Oil prices eased on Friday as traders monitored the slow pace of recovery on the United States Gulf Coast after Hurricane Rita and its possible long-term impact on northern-hemisphere winter fuel supplies.
Benchmark light, sweet crude for November delivery fell by 24 cents to $66,55 a barrel on electronic trading on the New York Mercantile Exchange mid-afternoon in Singapore.
The contract had closed at $66,79 a barrel, up 44 cents in New York floor trading on Thursday.
On London’s International Petroleum Exchange, November Brent contracts were down by 33 cents to $63,51 a barrel.
Prices rose overnight on news that Gulf of Mexico oil production had started — but only slightly. The Minerals Management Service said that by Thursday, 98,6% of output was still blocked, allowing a flow of 1,48-million barrels of oil per day. Suspended natural gas production was slightly lower at 79,79%, or 7,98-billion cubic feet per day, it said.
Damage reports have been filtering in from oil companies hit by Rita, with many not providing any definite start-up timeline.
Restoration of electric power also has been slow.
More than 39-million barrels of oil, or 7,2% of annual oil production, and 188-billion cubic feet, or 5,2%, of annual natural gas production, have been blocked since Katrina hit last month.
On Friday, ExxonMobil said its 183 000-barrel-a-day Chalmette, Louisiana, refinery should restart in November.
Traders and analysts said there was no decisive news to push prices either way on Friday. Prices had risen past the $70 a barrel threshold after Katrina made landfall on August 30 and surged past $65 after Rita took out or shut down what its predecessor had missed.
“Every so often, some event occurs … And then the event goes away, but the prices don’t go down as far as before,” said John Vautrain, vice-president at Texas-headquartered energy consultants Purvin & Gertz.
Oil prices remain about 33% higher than a year ago, when Hurricane Ivan hit US oil facilities.
Heating oil eased two cents to $2,1040 a gallon (3,8 litres), while gasoline fell five cents to $2,19 a gallon. Natural gas stood at $14,10 per 1 000 cubic feet, a fall of 10 cents.
Analysts remain concerned about how production shutdowns will affect heating oil supplies ahead of the northern-hemisphere winter. A lack of refining capacity, which was already evident before the storms, could limit heating oil supplies and cause prices to rise.
“The concern is that we could be short of heating oil. To prevent that, US refineries need to get back on its feet quickly,” said Vautrain.
Prices aren’t likely to ease, said Tom Kloza, an analyst at the Oil Pricing Information Service. He added that the retail prices of jet fuel and diesel — which affect the transportation and farming industries — are poised to spike further. — Sapa-AP