By Mark Shenk and Samantha Zee
Sept. 4 (Bloomberg) -- Crude oil was little changed after Royal Dutch Shell Plc and ConocoPhillips said that Hurricane Gustav caused no damage to platforms in the Gulf of Mexico.
Exxon Mobil Corp. said workers are returning to facilities that weren't in the direct path of Gustav. Oil fell yesterday as the euro dropped to a seven-month low against the dollar. Prices rebounded from the session's lows on forecasts that tropical storms were forming in the Atlantic.
``The next number we are going to test is $100,'' said Chip Hodge, a managing director at MFC Global Investment Management in Boston, who oversees a $4.5 billion energy-company bond portfolio. ``One hedge fund has shut down and the demand picture here has been ugly, so the market will remain under downward pressure.''
Crude oil for October delivery was unchanged at $109.35 a barrel at 8:59 a.m. Sydney time on the New York Mercantile Exchange. Yesterday, oil fell 36 cents, or 0.3 percent, to settle at $109.35 a barrel. Prices, which are up 46 percent from a year ago, are 26 percent down from the record $147.27 reached July 11.
Tropical Storm Hanna expanded as it lashed Haiti and the Bahamas with torrential rains, laying a course that forecasters say may take it away from the Gulf and toward South Carolina as a hurricane by the end of the week, the U.S. National Hurricane Center said as of 5 p.m. Miami time.
Farther out to sea, Hurricane Ike's winds strengthened to 70 miles per hour. Tropical Storm Josephine in eastern Atlantic Ocean, packed winds of about 60 mph that are forecast to weaken later this week, the center said.
`Reassuring' News
``Most of the news about damage has been reassuring,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``I think the market would be falling out of bed if it weren't for Hanna, Josephine and Ike. There's a line of storms forming in the Atlantic that has got to have traders worried.''
Shell said in an e-mailed statement earlier this week that initial reports indicate no major damage to the oil producer's onshore facilities in Louisiana. ConocoPhillips said there was no ``significant damage'' to its Magnolia platform in the Gulf.
Anadarko Petroleum Corp. restarted production at its Nansen and Boomvang platforms in the Gulf on Sept. 2 and is returning workers to offshore facilities that were outside the path of Gustav. Anadarko was producing the equivalent of about 150,000 barrels a day of oil from the region before output was shut in preparation for the storm.
Gulf Shutdowns
About 96 percent of crude-oil production in the Gulf and 92 percent of natural-gas output remains halted because of Gustav, the U.S. government said. Producers reported that 91 rigs and 599 platforms are evacuated due to the storm, the Minerals Management Service said yesterday in a statement on its Web site.
About 1.2 million barrels of daily oil production remain shut-in, along with 6.7 billion cubic feet of gas.
The euro fell to the lowest in more than seven months against the dollar after reports showed business investment, exports and retail sales declined, adding to evidence of an economic slump in the single-currency region.
The dollar's recovery will cause the decline in oil prices to continue, OPEC President Chakib Khelil said yesterday in a phone interview, adding that he expects supply to outstrip demand by as much as 1 million barrels a day in the first half of 2009.
The Organization of Petroleum Exporting Countries will meet on Sept. 9 in Vienna to review production targets.
``There is going to be a lot of talk from OPEC because of the drop in prices,'' Hodge said. ``Iran and Venezuela will want to defend high prices at all costs because they need the funds, given all of their social spending. The Saudis might actually want to see prices fall a bit more.''
To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net; Samantha Zee in Los Angeles at szee@bloomberg.net.
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Thursday, September 4, 2008
Crude Oil Is Little Changed After U.S. Gulf Avoids Storm Damage
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