Current Oil Prices Rise as TS Isaac Threatens Refinery Operations

Current oil prices have increased as Tropical Storm Isaac moves across the Mexican Gulf and in the direction of the U.S. mainland while obtaining strength and posing a threat to many operations of oil production and refining. Moreover, Venezuelan refinery explosion pushed prices upward as well.

In the NYMEX, the crude price per barrel for delivery in October gained $1.03, reaching $97.18 in Bangkok’s late afternoon time. During the last trading day of the past week, the contract had a 12 cent drop to end at $96.15 a barrel.

In London’s ICE Futures Exchange, Brent gained $1.21 to a current crude price of $114.80 a barrel.

In an email commentary from oil analyst Stephen Schork, he said that he is expecting volatility to be much higher for the current week because of the storm. According to weather forecasters, Isaac will gain strength before it becomes a Category 2 hurricane somewhere in between New Orleans and Florida Panhandle in the next couple of hours.

Schork fears that the current storm will be like Hurricanes Katrina and Gustav in 2005 and 2008, respectively. Both hurricanes damaged pipelines and refineries in the Gulf and disrupted the traffic of oil tankers.

The explosion and fire that stopped operations at Venezuela’s Western Amuay refinery is another factor that is pushing the crude price per barrel upward, according to energy analyst Victor Shum of Singapore’s Purvin & Gertz’ consultancy.

Amuay is one of the largest refineries worldwide which, along with the Cardon refinery next door, make up the Paraguana Refinery Complex. Both refineries process around 900,000 crude barrels daily and produce 200,000 gasoline barrels daily.

Elsewhere in the energy markets, the price of wholesale gasoline gained almost a dime to $3.0008 a gallon. The cost of heating oil had a 5-cent gain to $3.1727 a gallon. The natural gas futures had a 4-cent increase to $2.743 for every 1,000 cubic feet.

By: Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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