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UPDATE 7-Oil prices slip as Hurricane Laura hammers U.S. Gulf Coast

Thu, 27th Aug 2020 03:31

* Storm shuts 84% of Gulf production, 12% U.S. refining
capacity

* Refiners currently assessing damage to plants
(New throughout, updates prices, market activity and comments)

By Laura Sanicola

NEW YORK, Aug 27 (Reuters) - Oil prices fell on Thursday as
a massive hurricane in the Gulf of Mexico made landfall in the
heart of the U.S. oil industry, forcing oil rigs and refineries
to shut down.

Brent crude futures for October, which expire on
Friday, fell 70 cents, or 1.5%, to $44.94 a barrel by 1:15 EDT
(1615 GMT). U.S. West Texas Intermediate (WTI) crude
futures fell 66 cents or 1.5% to $42.73 a barrel.

The storm hit Louisiana early Thursday with 150
mile-per-hour (240 kph) winds, damaging buildings, knocking down
trees and cutting power to more than 400,000 people in Louisiana
and Texas. Its storm surge was less than predicted, sparing
inland plants from feared flooding.

Oil producers on Tuesday had shut 1.56 million barrels per
day (bpd) of crude output, or 84% of the Gulf of Mexico's
production, evacuating 310 offshore facilities.

At the same time, refiners that convert nearly 2.33 million
bpd of crude oil into fuel, and account for about 12% of U.S.
processing, halted operations.

"On the one hand refinery shutdowns reduced the demand for
crude oil, but at the same time Gulf of Mexico production was
shut in, nearly offsetting each other," said Andrew Lipow,
president of Lipow Oil Associates in Houston.

Exxon Mobil Corp said it was contacting employees of
its 369,000 barrel-per-day oil refinery and chemical plant in
Beaumont, Texas, and preparing a preliminary tally of damages.
The large plant was one of six plants along the Gulf Coast's
refinery row that shut this week ahead of the storm.

"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.
(Additional reporting by Jessica Resnick-Ault in New York,
Ahmad Ghaddar in London, Sonali Paul and Koustav Samanta;
editing by Jason Neely and David Gregorio)

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