Oil prices rise on storm threat
on 31/10/2012 10:17:57
Concerns about oil supplies pushed benchmark crude for December delivery up 78 cents to 86.46 dollars per barrel in late afternoon Bangkok time in electronic trading on the New York Mercantile Exchange. The contract rose 14 cents to finish at 85.68 dollars a barrel in New York.
Brent crude, used to price many international varieties of oil, rose 46 cents to 109.54 dollars per barrel.
A hurricane which evolved into a winter superstorm, Sandy cut power to more than eight million homes, shut down 70% of east coast oil refineries and inflicted worse-than-expected damage in the New York metropolitan area. That area produces about 10% of US economic output.
Sandy came ashore on Monday evening in New Jersey, dumped heavy rain inland in Pennsylvania yesterday and was expected to turn towards New York state and Canada overnight.
The storm will end up causing about 20 billion dollars in property damages and 10 billion dollars to 30 billion dollars more in lost business, according to IHS Global Insight, a forecasting firm.
Widespread power cuts and transportation disruptions, and hazardous driving conditions would probably reduce demand for energy. But analysts said crude imports were likely to be reduced until east coast ports reopen.
"So even if refineries were able to get up and running soon, there's a good chance we won't have the feedstock to keep them going," said Carl Larry of Oil Outlooks and Opinions.
The Nymex was closed yesterday because of the storm, but electronic trading continued. Normal trading is expected to resume today.