Oil Rises on Signs of More Damage in Gulf
U.S. oil prices rose on Thursday (Sept. 29) on growing signs that crude production from the Gulf of Mexico may be slow to return after back-to-back hurricanes left the region in shambles, according to Reuters.
The U.S. Minerals Management Service said Thursday that undersea pipelines carrying oil from deep sea fields to the coast may have taken more damage than first feared, potentially delaying the recovery of a quarter of U.S. output.
Meanwhile, reports of damaged rigs and platforms continued to roll in from operators in the hard-hit gulf, where nearly all crude output and 80% of natural gas production remained frozen as of Thursday.
“There is still a lot of concern about how bad the damage is in the Gulf of Mexico. It will be an incredible achievement if we can avoid fuel shortages this winter,” said Phil Flynn, analyst at Alaron Trading in Chicago.
U.S. crude on the New York Mercantile Exchange settled up 44 cents to $66.79 a barrel, shrugging a downward move in gasoline prices of 8.77 cents to $2.2516 a gallon. London Brent settled at $63.84, down 9 cents.
Oil prices have been holding firmly over $60 a barrel in recent weeks after hurricanes Katrina and Rita knocked out a huge amount of U.S. refining and crude production.
But prices remain below the peak near $71 hit late last month, pressured by the release of emergency crude from global reserves and less demand from crippled refiners.
More than 3 million barrels per day of fuel processing capacity remained shut Thursday in the wake of the hurricanes, and Washington has said that up to 15% of U.S. capacity could be out for at least another couple of weeks.