AP Worldstream: Crude prices extend slide as oil industry dodges Rita bullet: “The price of crude oil extended its slide in Asian trade Monday, after Hurricane Rita narrowly missed crucial oil processing zones with relatively light damage reported. But with at least seven refineries without power in Texas and Lousiana, analysts caution such outages could lead to petroleum product shortages _ and higher prices _ with the Northern Hemisphere winter fast approaching.”: Monday Sept 26, 2005
By EN-LAI YEOH
The price of crude oil extended its slide in Asian trade Monday, after Hurricane Rita narrowly missed crucial oil processing zones with relatively light damage reported.
But with at least seven refineries without power in Texas and Lousiana, analysts caution such outages could lead to petroleum product shortages _ and higher prices _ with the Northern Hemisphere winter fast approaching.
Elsewhere, China's oil imports grew 3.9 percent on year in August, with the mainland bringing in 83 million metric tons (91.49 U.S. tons) of crude for the year. Still, imports fell six percent on month _ a possible indication of falling demand from Beijing.
Mid-morning in Singapore, front-month November contracts on the New York Mercantile Exchange fell 55 cents to US$63.64 a barrel in Asian electronic trade that continued from an unusual Sunday session in New York. It had fallen as low as US$62.65 in light activity.
Seven facilities in Port Arthur and Beaumont, Texas, and Lake Charles, Lousiana, were without power from Rita, which came onshore over the weekend as a 193-kph (120-mph) hurricane after swirling as a Category 5 beast with 281-kph (175-mph) winds in the Gulf of Mexico.
The 255,000-barrel-per-day Valero Energy Corp. plant in Port Arthur appeared to be the most heavily damaged, facing at least two weeks of repairs from significant damage to two cooling towers and a flare stack.
ConocoPhillips meanwhile, could not provide a restart date Monday for its Lake Charles refinery. Calcasieu Refining Co. and Citgo Petroleum Corp., a subsidiary of Petroleos de Venezuela S.A., also have refineries in Lake Charles. In Port Arthur, refineries are owned by Valero Energy Corp., Total S.A. and Motiva Enterprises LLC, a joint venture between Royal Dutch Shell PLC and Saudi Refining Inc.; Exxon Mobil Corp. has a refinery in Beaumont.
Recovery hinges primarily on the restoration of electricity. The area's primary utility, Entergy Corp., said 271 high-voltage transmission lines were down and 275 substations out of service, and there was no immediate timeline of when power would be restored.
"Extended U.S. refinery outages due to storm damage could create acute product shortages. Although imports can probably offset the shortfall, they will come at a price," said Energyintel analyst Peter Kemp from London.
The U.S. Minerals Management Service said Sunday that 666 platforms in the Gulf remained unstaffed, up slightly from Saturday. Oil production in the Gulf of Mexico was totally shut down, and more than 80 percent of natural gas output was off. Since Katrina hit a month ago, more than 33 million barrels of oil and 156 billion cubic feet of natural gas have been lost.
While facilities largely escaped unscathed from Rita, analysts say prices are likely to rise ahead of winter. The production of distillates traditionally rises around this time of the year, but with several refineries out, analysts fear tight supplies of heating oil, natural gas and diesel.
"Anything you lose is going to make things worse," said Fimat USA analyst Mike Fitzpatrick.
Heating oil fell three cents to US$1.9139 a gallon (3.8 liters), gasoline slipped seven cents to US$2.009 a gallon, while natural gas _ the product some analysts are most concerned about _ rose a tad to US$12.33 per 1,000 cubic feet.
Unlike oil with the strategic reserve, there is no safety net for natural gas production in the United States. The Gulf Coast produces about a third of U.S. crude and more than a quarter of its natural gas.
From Beijing, China said its oil imports rose 3.9 percent for the first eight months of 2005 but fell six percent from July to 8.7 million metric tons (9.59 U.S. tons).
Rising demand from the United States and China, the world's top two consumers of crude, has been blamed for shrinking global excess capacity.
Copyright 2003 Associated Press
Click here to return to ShellNews.net HOME PAGE