Crude oil prices fell on the New York and London markets on Oct. 6 while Hurricane Nate approached the US Gulf Coast. Nate made landfall near Biloxi, Miss., as a Category 1 hurricane on Oct. 7 and was downgraded to a tropical depression as it moved over Alabama.
An estimated 93% of US oil production in the Gulf of Mexico was shut in advance of the storm, US government reports said.
The US Bureau of Safety and Environmental Enforcement said as of 12:30 pm EDT on Oct. 8 that 1.6 million b/d (92.61%) of the oil production and 2,503 MMcfd (77.74%) of natural gas production in the federally administered areas of the Gulf of Mexico was shut in.
Oil and gas production “should fully recover by the end of the week, if not sooner,” Andy Lipow, president of Lipow Oil Associates in Houston, told Bloomberg on Oct. 8. Nate “was very fast-moving,” he said, adding, “It doesn’t seem that much damage was done to any of the offshore platforms, and the oil companies will be able to get their people back in place in short order.”
Shell started returning workers to Mars, Olympus, Ursa, and Ram Powell production hubs and expected to resume production after inspecting the equipment. Workers had been evacuated as a precaution.
Phillips 66 had shut the Alliance refinery in Louisiana but it was said to be undamaged.
On world oil markets, investors awaited release of oil market reports from the Organization of Petroleum Exporting Countries on Oct. 11 and the International Energy Agency on Oct. 12.
Oil market participants note additional US sanctions are possible against Iran because US President Donald Trump had suggested he might refuse to certify Iran is complying with the 2015 international nuclear agreement.
“The US might decertify Iran, and that is another thing that we will be watching,” said Olivier Jakob, Petromatrix managing director. “It can bring an additional layer of geopolitical uncertainty.”
Energy prices
The November light, sweet crude contract on the New York Mercantile Exchange declined $1.50 to $49.20/bbl on Oct. 6. The December contract also dipped by $1.50 to $49.65/bbl.
The NYMEX natural gas price for November dropped 6¢ to a rounded $2.86/MMbtu. The Henry Hub cash gas price was $2.92/MMbtu, up 1¢.
Heating oil for November declined 4¢ to a rounded $1.74/gal. The NYMEX reformulated gasoline blendstock for November fell 5¢ to a rounded $1.56/gal.
The Brent crude contract for December on London’s ICE dropped $1.38 to $55.62/bbl. The January contract was down $1.35 to $55.36/bbl. The gas oil contract for October decreased $20.25 to $520/tonne.
OPEC’s basket of crudes for Oct. 6 was $54.47/bbl, down 15¢.
Contact Paula Dittrick at [email protected].