Oil Prices Drop Now That Rita Changes Course
NEW YORK (Reuters) - U.S. crude oil futures slid Friday as traders kept a close watch on Hurricane Rita, which was bearing down on the energy industry on the Gulf Coast.
At 11:15 a.m. EDT, November crude was down $1 at $65.55 per barrel on the New York Mercantile Exchange. In London, Brent crude shed 56 cents to $64.04 a barrel on the International Petroleum Exchange.
"The market is so hyper-sensitive to changes in the storm," said Marshall Steeves, an analyst at Refco in New York. "The thinking is it will be less of a direct hit on Houston and therefore less damaging to energy interests and that was enough for people to take some profits."
October heating oil was down 6.58 cents at $1.98 per gallon. NYMEX October gasoline fell 5.94 cents to $2.08 per gallon.
Steeves added that gasoline was unlikely to fall below $2 ahead of the weekend, with the hurricane yet to hit land.
In Houston, where people heeded calls to evacuate, gasoline at the pump became a rare commodity Thursday.
And distribution problems after the storm as refineries hurry to restart could jack up prices that already rose over $3 after Hurricane Katrina slammed into Louisiana and Mississippi last month, analysts said.
Hurricane Rita remained a dangerous Category 4 storm with maximum sustained winds reaching 135 miles per hour, the National Hurricane Center said.
It projected Rita to continue moving toward the northwest at nearly 9 mph for the next 24 hours, which would put the core of Rita over the southwestern Louisiana and upper Texas coasts late today or tonight.
At 8 a.m. EDT, the center of Hurricane Rita was located about 260 miles southeast of Galveston, Texas.
The International Energy Agency said it could order another release of emergency fuel reserves, the second in a month, to help the hurricane-battered U.S. oil industry.
"We are on alert," IEA chief Claude Mandil told Reuters.
The Paris-based agency will meet Saturday to assess damage from Rita. The IEA released fuel earlier this month after Hurricane Katrina struck the U.S. Gulf Coast.
The Department of Energy, for its part, said it was ready to loan oil from the federal Strategic Petroleum Reserves as it did after Katrina.
But the problem at the moment is on refining capacity, traders and analysts pointed out.
In addition to four refineries still out of action after Katrina, 15 plants in Texas and Louisiana have been closed as a precaution against Rita.
Almost 92 percent of offshore oil output, or 1.379 million barrels per day, was out of action in the Gulf of Mexico as of Thursday, the U.S. Minerals Management Service said. (Full story)
The threat of supply disruption also hung over Nigeria where armed militants are targeting oil facilities to demand the release of a militia leader from jail.
The militants have threatened to blow up pipelines and platforms in the world's eighth biggest crude exporter. U.S. oil firm Chevron shut a second platform Friday.
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