NEW YORK – Crude oil prices edged up in jittery trading Monday, as the oil industry assessed the damage caused by Hurricane Rita (search) over the weekend.
Gasoline futures were lower, as Rita gave a glancing blow to crucial oil refineries in Texas. But with the Gulf region still recovering from Hurricane Katrina, consumers shouldn't expect prices at the pump to fall to pre-Katrina levels anytime soon.
"Most areas of the country will see price increases in gasoline this week," said Tom Kloza, analyst at Oil Price Information Service (search) in Wall, N.J. The average U.S. retail price of a gallon of unleaded gasoline was $2.80 on Monday, up from $2.75 Sunday, but below the all-time high of $3.06 on Sept. 5.
The average price a month ago, a few days before Katrina hit, was $2.60.
"This is a tale of two markets. In the futures market, prices are down, but in the physical market, prices are still very high," Kloza said, noting that refiners are willing to pay top dollar to stay stocked.
Gasoline slipped nearly 5 cents to $2.04 a gallon on the New York Mercantile Exchange (search), where light, sweet crude inched up 16 cents to $64.35 a barrel.
Heating oil rose nearly 5 cents to $1.9950 a gallon.
On London's International Petroleum Exchange, November Brent crude futures rose 24 cents to $62.70 a barrel.
With many Gulf cities out of commission in the coming week, there should be some relief in demand and the chance for crude inventories to build, said John Kilduff, analyst at Fimat USA in New York.
"Crude oil has the real potential to trade lower, below $60 in the coming days," Kilduff said.
Sixteen Texas oil refineries remained shut down after the storm, and crews found significant damage to at least one in the Port Arthur area, said Energy Department (search) spokesman Craig Stevens.
These outages could lead to petroleum product shortages and further aggravate the heating oil and natural gas markets, which are usually volatile ahead of the winter months.
President Bush said Monday the government is prepared to again tap into the Strategic Petroleum Reserve to alleviate any new pain at the pump.
"A lot of our production comes from the Gulf and when you have a Hurricane Katrina followed by a Hurricane Rita, it's natural, unfortunately, that it's going to affect supplies," Bush said after a briefing at the Energy Department.
While preliminary assessments show little damage to most refineries in the U.S. Gulf area, a key economic aide to Bush said hundreds of thousands of jobs were at risk if the storm stunted oil production.
"There is of course the direct impact of the shutting down a part of the economy, the loss of several hundred thousand jobs and reduced energy production in the Gulf," warned Ben Bernanke, chairman of the White House Council of Economic Advisers, in a speech Sunday.
Seven facilities in Port Arthur and Beaumont, Texas, and Lake Charles, Louisiana, were without power from Hurricane Rita, which left the 255,000-barrel-per-day Valero Energy Corp. plant in Port Arthur the most heavily damaged. The facility faces at least two weeks of repairs.
The International Energy Agency, the watchdog for industrialized, oil-importing countries, said it could release state-held stockpiles within the week to cushion any lost output from Rita.
IEA Executive Director Claude Mandil said Monday the agency would decide on whether a further release of state-controlled stockpiles of crude and gasoline is warranted within a week or so based on Rita's impact.
The U.S. Minerals Management Service (search) said Sunday that 666 platforms in the Gulf remained unstaffed, up slightly from Saturday. Oil production in the Gulf of Mexico was totally shut down, and more than 80 percent of natural gas output was off. Since Katrina hit a month ago, more than 33 million barrels of oil and 156 billion cubic feet of natural gas have been lost.
Elsewhere, France's largest oil refinery in Normandy is likely to come to a complete halt Monday as a strike over pay extends into its seventh day, oil company Total SA said.
Total said production will halt at the few units still operating at its 328,000-barrel per day refinery, which accounts for roughly 15 percent of France's refining capacity.
Also, U.S. oil giant Chevron said it had restarted production at one of two oil platforms in Nigeria shut down last week because of threats from a southern militia, a company spokesman said. The Robertkiri facility produces 19,000 barrels of oil per day.