Oil traders calmed after Hurricane Dennis created minimal problems for offshore rigs after initial predictions had those investors worried. Light sweet crude on the August contract slides down ever so slowly to $58.10 in midmorning trading.
Gasoline and heating oil came down off their record highs last week of nearly $1.90 a gallon. Gasoline traded at $1.75 a gallon and heating oil traded for $1.68. Brent Crude on the IPE in London was down to $56.68.
Prices at the pump remain high as the EIA reported last week that gas went up a penny to $2.22 and diesel was up 1.2 cents to $2.35 a gallon. The drops on the exchange should precipitate a drop at the pump.
After a brutal onslaught in the Caribbean hitting the high end of category 4 at one point, Dennis was responsible for dozens of deaths in Cuba and Jamaica, the Atlantic storm lost much of its ferocity when it made landfall over the weekend and it missed most of the oil rigs in the process.
Companies began moving back to the rigs to restart them and get production back underway perhaps as early as Monday evening. Two refineries continued to have cut or slowed production because of Dennis. The Deer Park Refining LP facility in Deer Park Texas and Chevron’s facility in Pascagoula, Mississippi both remain slowed as the remnants of Dennis move north.
All the companies were relieved to find little or no damage to the rigs. Last year, Ivan was terrible in its destruction and many platforms were down for quite some time for repairs. Traders also settled back down after hearing oil rig issues were minimal.
This still just reiterates the point the oil production is stretched very thin and it doesn’t take much to start the traders on a bullish charge through the market place. As OPEC at capacity, it’s going to be another month before any decent increase in supplies hits the market when Caspian Sea oil adds another million barrels onto the scene.
Until then, gas consumers remain at the whim of mother nature and all the other problems that may give traders just what they need to make more money.
John Stith is a staff writer for Murdok covering technology and business.
