HOUSTON, Aug. 16 -- Energy prices continued to climb Aug. 15 as two tropical storms posed potential threats to oil and gas facilities in the Gulf of Mexico and along the Gulf Coast.
Tropical Storm Erin was downgraded to a tropical depression when its winds fell to 35 mph, lower than the 39 mph threshold for tropical storms, as it made landfall Aug. 16 at Copano Bay, 25 miles northeast of Corpus Christi, Tex. The National Hurricane Center said the storm continued to move west-northwest at 12 mph and was expected to dump 4-10 in. of rain along a corridor between San Antonio and Austin. A flash flood watch was issued for 33 Texas counties through Aug. 17, which could affect movements of drilling rigs in those areas.
Shell Oil Co., Houston, earlier evacuated 188 workers from offshore facilities in the Gulf of Mexico ahead of that storm and shut in 5 MMcfd of natural gas production from North Padre Island 927 field 75 miles southeast of Corpus Christi. Production will remain shut-in until crews return to the site, the company said.
Valero Energy Corp., San Antonio, said Erin's heaviest rains and strongest winds missed the company's 340,000 b/d refinery in Corpus Christi. "Operations at the refinery continued as planned through the storm and remain at expected levels this morning, and we expect no disruptions to production," Valero said.
Meanwhile, Tropical Storm Dean in the Atlantic Ocean strengthened overnight into the first hurricane of the 2007 season, with sustained winds of 80 mph, putting it in Category 1 on the Saffir-Simpson scale. At 8 a.m. Aug. 16, it was 415 miles east of Barbados in the Lesser Antilles and moving west at 24 mph. Hurricane warnings were issued for Dominica and St. Lucia, with a hurricane watch in effect for the islands of Martinique, Guadeloupe, Saba, and St. Eustatius. Most computer models project Dean possibly moving over Jamaica during the weekend and towards the northern Yucatan Peninsula in Mexico early next week.
Valero said, "We are continuing to monitor Hurricane Dean. Operations at our Aruba refinery have not been affected."
In other action, the Energy Information Administration reported commercial US crude inventories fell 5.2 million bbl to 335.2 million bbl in the week ended Aug. 10. Wall Street analysts were expecting a draw of 2.5 million bbl. Gasoline stocks dropped 1.1 million bbl to 201.9 million bbl, vs. a consensus of an 800,000 bbl pull in the same period. Distillate fuel inventories inched up by 200,000 bbl to 127.7 million bbl, well below the 1.3 million gain expected (OGJ Online, Aug. 15, 2007).
"For the third time in a row, the US weekly statistics on crude oil have come out tighter than expected but for the third time in a row the statistics-induced rally has been sold into," said Olivier Jakob, managing director of Petromatrix GMBH, Zug, Switzerland.
The September contract for benchmark US sweet, light crudes gained 95¢ to $73.33/bbl Aug. 15 on the New York Mercantile Exchange. The October contract escalated by $1.19 to $73.21/bbl. On the US spot market, WTI at Cushing, Okla., was up 95¢ to $73.34/bbl. Heating oil for September delivery advanced by 4.44¢ to $2.03/gal on NYMEX. The September contract for reformulated blend stock for oxygenate blending (RBOB) advanced by 3.5¢ to $2.01/gal.
The September natural gas contract fell 7.6¢ to $6.86/MMbtu on NYMEX. On the US spot market, however, gas at Henry Hub, La., jumped up 40¢ to $7.30/MMbtu. EIA reported Aug. 16 the injection of 21 bcf of natural gas into US underground storage during the week ended Aug. 10. That was at the low end of the consensus by Wall Street analysts and down from injections of 42 bcf the prior week and 37 bcf during the same period a year ago. US gas storage is now just over 2.9 bcf, up 108 bcf from year-ago levels and 371 bcf above the 5-year average.
In London, the September IPE contract for North Sea Brent crude increased by $1.13 to $71.64/bbl. Gas oil for the same month escalated by $18 to $633/tonne.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 reference crudes gained 87¢ to $68.58/bbl on Aug. 15.
Contact Sam Fletcher at firstname.lastname@example.org.