Oil Prices Rise in Asia as Gustav Nears Louisiana Coast
SINGAPORE – Oil prices rose Monday in Asia to near $117 a barrel as Hurricane Gustav advanced on Louisana, prompting companies to shut down drilling and refining operations in the Gulf Coast coast region.
Light, sweet crude for October delivery was up $1.39 at $116.85 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract slipped 13 cents on Friday to settle at $115.46 a barrel.
"There's no question the drilling platforms in the Gulf of Mexico and the big refineries between Houston and New Orleans are in the path of this hurricane," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "There's likely to be some damage. We could see an extended period of disruption."
Oil companies are shutting down productions and evacuating facilities ahead of the storm. Exxon Mobil Corp., Royal Dutch Shell PLC and Valero Energy Corp., North America's largest refiner, were among the companies that said they had shut down Gulf Coast refineries, primarily in south Louisiana.
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Altogether, about 2.4 million barrels of refining capacity have been halted, roughly 15 percent of the nation's total, according to figures from Platts, the energy information arm of McGraw-Hill Cos. The U.S. Gulf Coast is home to nearly half the nation's refining capacity.
Australia's BHP Billiton Ltd, which has an interest in eight projects in the Gulf, said Monday it shut down production and evacuated personnel from its operations. Royal Dutch Shell PLC, BP PLC and Transocean Inc. have also evacuated employees from rigs in the Gulf region.
In 2005, Katrina and Hurricane Rita destroyed 109 oil platforms and five drilling rigs.
Forecasters said Gustav was moving faster than expected as it marched toward the coast with top sustained winds of around 115 mph. Early Monday, the National Hurricane Center said Gustav was a Category 3 storm centered about 175 miles southeast of the mouth of the Mississippi River and moving northwest near 17 mph.
About 1.9 million people have left the Louisiana coast region, the largest evacuation in state history, and thousands more had left from Mississippi, Alabama and flood-prone southeast Texas.
The storm has already killed at least 94 people on its path through the Caribbean, and comes three years after Hurricane Katrina killed 1,600, mostly from flooding in New Orleans.
In the U.S., the average retail gasoline price was up slightly to $3.687 a gallon, auto club AAA reported Sunday. The price rose slightly more than a penny Saturday. Gasoline prices peaked on July 17 at $4.114 a gallon.
Keeping prices from rising further are concerns that the credit crisis that began in the U.S. last year has spread to other developed countries and may undermine global demand for crude.
"Worries about an economic slowdown spreading to the euro zone and worries that oil demand growth in emerging markets may slow later this year are creating the current bearish sentiment in the oil market," Shum said.
In other Nymex trading, heating oil futures rose 6.06 cents to $3.2525 a gallon, while gasoline prices gained 6.28 cents to $2.922 a gallon. Natural gas for October delivery fell 11.9 cents to $7.824 per 1,000 cubic feet.
In London, October Brent crude rose $1.42 to $115.47 a barrel.
U.S. trading was closed Monday for Labor Day.