* OPEC+ expected to proceed with output increase
* Hurricane Ida shuttered refiners on the U.S. Gulf Coast
(Updates prices and Shell Norco status, adds commentary)
By Laura Sanicola
NEW YORK, Aug 31 (Reuters) - Oil fell on Tuesday, with
demand expected to drop after Hurricane Ida shuttered U.S. Gulf
Coast refineries, and as OPEC nations readied for a Wednesday
meeting, with the United States calling for the group to pump
more crude.
Brent crude futures for October, due to expire on
Tuesday, fell 42 cents, or 0.6%, to $72.99 a barrel by 2:00 p.m.
EDT (1600 GMT)
U.S. West Texas Intermediate (WTI) crude futures were
down 53 cents, or 0.8%, at $68.68.
Both benchmarks were on track for their first monthly loss
since March but were still not far from their July highs, when
Brent rose to its strongest since 2018 and U.S. crude to its
highest since 2014.
Hurricane Ida, which made landfall in the United States on
Sunday as a Category 4 hurricane, knocked out at least 94% of
offshore Gulf of Mexico oil and gas production and caused
"catastrophic" damage to Louisiana's grid.
Prices were pressured by concerns that power outages and
flooding in Louisiana after Hurricane Ida will cut crude demand
from refineries.
About 1.7 million bpd of offshore oil production was shut,
but that output may resume more quickly than many refining
operations along the Gulf that lost power. Analysts at FGE said
in a Tuesday note they expect roughly three-quarters of offshore
output to resume by the end of the week.
OPEC and allied producers in OPEC+ had agreed to add 400,000
barrels per day (bpd) to monthly supply until the end of
December. Sources told Reuters the group is likely to maintain
that plan despite U.S. pressure for more output.
"It looks like sticking to the plan from the last meeting,"
an OPEC+ source told Reuters.
OPEC's own data showed the market will face a deficit until
the end of 2021 but then flip into a surplus in 2022.
The Colonial Pipeline - the largest U.S. fuel line to the
East Coast - restarted its main gasoline and distillate lines on
Tuesday after shutting them ahead of the storm, but some
refineries are reporting damage to their plants.
Royal Dutch Shell Plc said it found evidence of
building damage at its 230,611 barrel-per-day (bpd) Norco,
Louisiana, refinery, a company spokesman said on Tuesday.
"If refiners recover capacity in two to four weeks, then we
should be OK. Beyond that, we will be driving inventory levels
very low and prices may start to react meaningfully higher,”
said Rebecca Babin, senior energy trader at CIBC Wealth.
(Additional reporting by Dmitry Zhdannikov in London, Sonali
Paul in Melbourne, Koustav Samanta in Singapore and Alex Lawler
in London;
Editing by David Gregorio and Steve Orlofsky)