* OPEC+ expected to proceed with output increase
* Hurricane Ida shuttered refiners on the U.S. Gulf Coast
(Adds settlement prices, market details)
By Laura Sanicola
NEW YORK, Aug 31 (Reuters) - Oil settled down 1% on Tuesday,
posting its first monthly loss since March, as demand is
expected to drop after Hurricane Ida shuttered U.S. Gulf
refineries.
Brent crude futures for October, due to expire on
Tuesday, settled down 42 cents, or 0.6%, at $72.99 a barrel.
U.S. West Texas Intermediate (WTI) crude futures
settled down 71 cents, or 1%, at $68.50.
Both benchmarks posted their first monthly losses since
March, even though they are not far from July highs. Brent lost
4% in July while U.S. crude fell 7%.
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..
OPEC's own data showed the market will face a deficit until
the end of 2021 but then flip into a surplus in 2022.
"It would hurt OPEC+’s credibility to change the terms after
only one month," said Bob Yawger, director of energy futures at
Mizuho.
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.
(Reporting by Laura Sanicola in New York
Additional reporting by Dmitry Zhdannikov in London, Sonali Paul
in Melbourne, Koustav Samanta in Singapore and Alex Lawler in
London;
Editing by Steve Orlofsky and Matthew Lewis)
