28 Aug Oil prices drop as hurricane forces shutdown of Gulf of Mexico refineries
Oil prices fell yesterday after more than 84% of oil output in the Gulf of Mexico was shuttered and almost 3 million barrels per day of refining capacity was closed in anticipation of a category 4 hurricane.
Hurricane Laura made landfall in the Gulf of Mexico and Louisiana early Thursday, causing Brent crude futures for October to fall 1.2% to US$45.09 per barrel and US West Texas Intermediate to slip 0.8% to $43.04.
While the evacuation of 310 offshore facilities resembled the biggest interruption to US oil production since Hurricane Katrina 15 years ago, the storm is only expected to have a short-term impact on prices with the market expecting a quick recovery for production platforms.
“These guys have gone through these drills many times,” said Jennifer Rowland, senior analyst at Edward Jones in St. Louis. “They know how to turn those units down and get them back up within a number of days…it shouldn’t be that big of an impact,” she added
On Friday Laura was downgraded to tropical storm status, but not before six people were killed in Louisiana and half a million homes were left with no power.