Oil Slides to a Five-Month Low
By GREGORY MEYER
September 9, 2008 9:48 a.m.
"This more southerly track toward southern Texas will keep a large majority of the energy-production region out of harm's way," said Jim Rouiller, senior energy meteorologist at private forecasting firm Planalytics, in a note.
Gasoline futures, which had run up Monday on fears that Ike will damage the Gulf's numerous refineries, dropped steeply Tuesday. Front-month October reformulated gasoline blendstock, or RBOB, fell 10.16 cents, or 3.7% to $2.6487 a gallon.
While last week's Hurricane Gustav left little lasting energy-sector damage in the Gulf, oil production remains offline. The Minerals Management Service said Monday that about 1 million barrels crude a day, or 20% of the domestic output, was shut in along the Gulf.
Gulf production will feel a new squeeze as oil companies empty platforms ahead of Ike. Royal Dutch Shell PLC said Monday it is evacuating its offshore personnel in the Gulf, while BP PLC has also begun to evacuate non-essential workers. The two companies are responsible for more than one-quarter of oil and gas production in the Gulf.
"We suspect that more concerted price weakness in crude will set in once the OPEC decision and Ike are both out of the way," said Edward Meir, an analyst at brokerage MF Global, in a note. "Up until then, we would caution the shorts to brace themselves for a lot of volatility, as prices will be navigating more than their fair share of crosscurrents this week."
The dollar also sustained its climb against the euro, weakening commodities' draw for investors. The European currency was recently at $1.40, from $1.4146 late Monday.
Heating-oil futures also declined, with the October contract down 6.17 cents, or 2.1%, to $2.9514 a gallon.
Gregory Meyer at email@example.com