Sam Fletcher
Senior Writer
HOUSTON, Sept. 13 -- Crude futures prices continued to erode on Sept. 12, falling to levels last seen in mid-August before Hurricane Katrina disrupted Gulf of Mexico oil and gas production and US product supplies.
Traders expect world demand for oil to diminish because of the sharp rise in energy prices after Katrina came ashore east of New Orleans on Aug. 29.
Several US oil companies apparently participated in the bidding that closed Sept. 9 for the sale of up to 30 million bbl of crude from the Strategic Petroleum Reserve (OGJ Online, Sept. 6, 2005). The Department of Energy said it expects to award contracts by Oct. 16.
Half of the crude offered is sour. DOE set a base reference price for $68.67/bbl for sweet and $61.66/bbl for sour crude.
The US Minerals Management Service said crews have not yet returned to three offshore rigs and 105 production platforms in the Gulf of Mexico. Production of 860,636 b/d of crude and 3.8 bcfd of natural gas in the gulf remain shut in. That amounts to 57.8% of the crude and 37.8% of the natural gas produced daily from the gulf. Offshore production lost to Katrina from Aug. 26 through Sept. 12 totals 18.9 million bbl of oil and 91.8 bcf of natural gas.
In addition, DOE said four Gulf Coast refineries with a combined capacity of nearly 900,000 b/d, or 5% of total US refining capacity, remained shut down: Chevron Corp. in Pascagoula, Miss.; ConocoPhillips, Belle Chasse, La.; ExxonMobil Corp., Chalmette, La.; and Murphy Oil Corp., Meraux, La.
Meanwhile, Valero Energy Corp. was in the process Sept. 13 of restarting units at its 84,000 b/d Wilmington, Calif., refinery, which was shut down safely Sept. 12 because of a total power failure, involving a Los Angeles utility company. Neighboring plants also were affected, said a company representative.
Energy prices
The October contract for benchmark US sweet, light crudes dropped 74¢ to $63.34/bbl Sept. 12 on the New York Mercantile Exchange. The November contract fell by 89¢ to $64.01/bbl. On the US spot market, West Texas Intermediate lost 74¢ to $63.35/bbl. Gasoline for October delivery dropped 8.6¢ to $1.87/gal on NYMEX, while heating oil for the same month declined by 8.22¢ to $1.81/gal.
The October natural gas contract plunged by 23.2¢ to $11.03/MMbtu. "Hurricane Ophelia moved north off the East Coast [on Sept. 12] after having posed a mild threat to the Gulf of Mexico," said analysts at Enerfax Daily. Also, air conditioner demand is trailing off seasonally.
In London, the October contract for North Sea Brent crude fell by $1.04 to $61.80/bbl on the International Petroleum Exchange. Gas oil for September was unchanged at $599.75/tonne, however.
The average price for the Organization of Petroleum Exporting Countries' basket of 11 benchmark crudes lost 85¢ to $56.73/bbl on Sept. 12.
Contact Sam Fletcher at [email protected].