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Crude oil prices extend slide
Oil prices slid Monday, holding below $64 a barrel, as markets sighed in relief that Hurricane Rita narrowly missed crucial U.S. petroleum processing zones in Texas with relatively light damage reported.
But 16 Texas oil refineries remained shut down after the storm, and crews found significant damage to at least one in the Port Arthur area, said Energy Department spokesman Craig Stevens. Analysts warned these outages could lead to petroleum product shortages — and higher prices — with the Northern Hemisphere winter fast approaching. "I think the market is taking this too calmly and we could see prices bouncing back any time," said Deborah White, an energy analyst with SG Securities in Paris. "There is an assessment in the market that we have arrived to a very strong turning point and demand will fall sharply," she added. Light sweet crude for November delivery fell 69 cents to $63.50 a barrel in electronic trading on the New York Mercantile Exchange. The contract had dropped as low as $62.65 in an unusual Sunday session in New York. Heating oil fell 4 cents to $1.9065 a gallon, while gasoline slipped more than 9 cents to $1.9925 a gallon. On London's International Petroleum Exchange, November Brent crude futures fell 71 cents to $61.73 a barrel. Seven facilities in Port Arthur and Beaumont, Texas, and Lake Charles, Louisiana, were without power from Hurricane Rita, which left the 255,000-barrel-per-day Valero Energy Corp. plant in Port Arthur the most heavily damaged. The facility faces at least two weeks of repairs. The International Energy Agency, the energy watchdog for industrialized, oil-importing countries, said it could release state-held stockpiles within the week to cushion any lost output from Rita. IEA Executive Director Claude Mandil said Monday the agency would decide on whether a further release of state-controlled stockpiles of crude and gasoline is warranted within a week or so based on Rita's impact. "Rita was better than expected, but no survey has been made on the platforms," said Mandil. The IEA's members began stockpiling crude following the oil shocks of the 1970s. After Hurricane Katrina's devastation to Louisiana and surrounding areas a month ago, the group made available 2 million barrels daily for 30 days. "Extended U.S. refinery outages due to storm damage could create acute product shortages. Although imports can probably offset the shortfall, they will come at a price," said Energyintel analyst Peter Kemp from London. The U.S. Minerals Management Service said Sunday that 666 platforms in the Gulf remained unstaffed, up slightly from Saturday. Oil production in the Gulf of Mexico was totally shut down, and more than 80 percent of natural gas output was off. Since Katrina hit a month ago, more than 33 million barrels of oil and 156 billion cubic feet of natural gas have been lost. Elsewhere, China said its oil imports grew 3.9 percent on year in August, with the mainland bringing in 83 million metric tons (91.49 U.S. tons) of crude for the year. Still, imports fell 6 percent to 8.7 million metric tons (9.59 U.S. tons) on month — a possible indication of falling demand in the second-biggest consumer of oil after the United States.
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