The Oil Complex Buttons Down while the NYMEX Opens Early

Most U.S. Gulf oil output shut as Gustav threatens
Sun Aug 31, 2008 9:55am EDT
Reuters

U.S. crude oil fell from a record high $147.27 a barrel in July to close at $115.46 on Friday.

The New York Mercantile Exchange on Saturday moved up Sunday's start time for electronic trading of energy contracts to 2:30 p.m. EDT from 6 p.m. EDT. (To facilitate the evacuation of the oil shorts? Or to enable the spin that its no big deal and the Strategic Petroleum Reserve will provide emergency aid? Stay tuned. - Jesse)

Katrina and Hurricane Rita that followed on its heels destroyed 124 offshore platforms, temporarily shuttered about 30 percent of U.S. refining capacity and left nearly a quarter of offshore Gulf oil production shut up to nine months later.

The Gulf provides a quarter of U.S. oil output and 15 percent of natural gas production.

Shell, the region's largest producer at 370,000 barrels of oil equivalent per day, was shutting all offshore oil and natural gas production on Saturday.

BP said it was also shutting its Gulf production on Saturday, while Exxon Mobil Corp said 5,000 barrels of oil output and 50 million cubic feet per day in natural gas production was shut by Saturday morning.

PRODUCTION CUTS

Six Louisiana refineries that process 1,305,000 barrels per day of crude oil -- 7.4 percent of U.S. refining capacity -- were closing down for the storm, while a total of 12.4 percent of U.S. refining capacity had been affected in someway.

Mississippi River traffic south of New Orleans closed at 6 p.m. CDT. Ship channels into Lake Charles in west Louisiana and Beaumont and Port Arthur in east Texas planned to shut by Sunday night, cutting off crude oil shipments to refineries.

The Louisiana Offshore Oil Port, the only U.S. deepwater port capable of offloading giant oil tankers, stopped taking crude from ships on Saturday, a spokeswoman said, but continued to supply refiners from onshore crude oil tanks.