Senior Staff Writer
HOUSTON, Sept. 14 -- The front-month contract for crude closed above $80/bbl for the first time upon news that Hurricane Humberto had disrupted power to three refineries in Port Arthur, Tex.
The October contract for benchmark US light, sweet crudes settled at $80.09 Sept. 13 on the New York Mercantile Exchange, up 18¢. It was the contract's third consecutive record settlement. But adjusting for inflation, oil remains well below crude price highs of early 1980, analysts said (OGJ Online, Sept. 13, 2007).
Hurricane Humberto surprised forecasters as it intensified quickly from a tropical storm to a hurricane while making landfall at High Island, Tex. High winds snapped many power lines in East Texas.
Power failure shut down Total Petrochemicals USA's 231,252 b/cd refinery, Valero Energy Corp.'s 250,000 b/cd refinery, and Motiva Enterprises LLC's 285,000 b/cd refinery.
Total reported that partial power had been restored by late Sept. 13, and the refinery was expected to be back up within 5 days.
Valero said startup activities were under way at its plant with some units on circulation as of Sept. 14. The refinery is working towards returning to production by the end of next week, the company said.
Shell Oil Co., part owner of Motiva, said it continued assessing damage and had no estimate for when normal refinery operations would be restored.
The US Minerals Management Service said Sept. 13 it had received no reports of suspended oil or gas production or platform evacuations because of Humberto.
Meanwhile, natural gas futures jumped by more than $1 during the week to settle above $6/MMbtu on NYMEX on Sept. 13, said Barclays Capital analyst Kevin Norrish in a Sept. 14 research note. He attributed the price movement to fears of Atlantic tropical storm activity becoming hurricanes.
"The market continues to view natural gas price risk with the memory of Hurricanes Rita and Katrina of 2005 still clearly in mind," Norrish said. "Statistically, the true risk of hurricane-caused losses of natural gas production in 2007 are small."
Separately, underground gas storage levels are the same level as this time last year. The US Energy Information Administration reported an injection of 64 Bcf for a total 3 Tcf of working gas in storage.
Norrish said it's possible for the gulf to experience an above-normal hurricane year in 2007 without any reduction on gulf oil and gas production. "Conversely, a single extreme storm can force large losses in oil and gas production," he said.
The November contract for US light, sweet crudes increased 24¢ to $78.78/bbl. On the US spot market, West Texas Intermediate at Cushing, Okla., rose 18¢ to $80.15/bbl.
The October contract for reformulated blendstock for oxygenate blending (RBOB) rose 3.04¢ to $2.0464/gal on NYMEX. Heating oil for the same month edged down 0.01¢ to $2.219/gal.
The October natural gas contract dropped 40.9¢ to $6.029/MMbtu on NYMEX. On the US spot market, gas at Henry Hub, La., rose 9¢ to $6.23/MMbtu.
In London, the October IPE contract for North Sea Brent crude dropped 28¢ to $77.40/bbl.
The average price for OPEC's basket of 11 benchmark crudes increased by 43¢ to $74.64/bbl on Sept. 13.
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