Oil futures rise as Isaac threatens Gulf output
SAN FRANCISCO (MarketWatch) -- Crude-oil futures ended higher on Tuesday, breaking a three-day losing streak, as traders grew concerned about Hurricane Isaac's impact on oil production in the Gulf of Mexico.
Crude for October delivery (CLV2) advanced 86 cents, or 0.9%, to $96.33 a barrel on the New York Mercantile Exchange. Oil prices had lost nearly 2% over the past three days.
The National Hurricane Center upgraded Isaac midday Tuesday to a Category 1 hurricane with maximum winds of 75 miles per hour. Read more about Isaac.
In the center's latest advisory, Isaac was 135 miles southeast of New Orleans. The center of the hurricane is expected to reach the coast of southeastern Louisiana as early as this evening.
Crude-oil prices lost 0.7% on Monday as the storm concerns centered on the impact on the refinery industry.
With Isaac upgraded and remaining a fast-changing storm, traders became increasingly worried about crude production, said Tom Pawlicki, director of market research at EOXLive in Chicago. Read about the storm's likely impact on retail gasoline prices.
Extra support for prices also came as President Barack Obama, speaking ahead of Isaac's landfall to warn Gulf residents "not to tempt fate," made no mention of releasing strategic oil reserves, which had been a worry on some traders' minds, Pawlicki said.
Referring to the Strategic Petroleum Reserve, White House Press Secretary Jay Carney reiterated Tuesday that "all options remain on the table."
Isaac had earlier triggered price dips on market speculation that it would justify U.S. crude-stock releases, said Matthew Parry, senior oil-market analyst at the International Energy Agency.
Isaac will be the first hurricane to hit the Gulf Coast since 2008.
The region accounts for an estimated 44% of U.S. refining capacity, and 23% of U.S. crude-production capacity.
The latest update from the Bureau of Safety and Environmental Enforcement midday Tuesday said approximately 93% of daily oil production and about 67% of natural-gas output in the Gulf of Mexico have been shut in due to the hurricane.
Crude derivatives, natural gas lower
Traders also had to contend with data showing a drop in consumer confidence to a nine-month low in August, according to the Conference Board. The board said its confidence index dropped to 60.6 from 65.4. Economists surveyed by MarketWatch had forecast the index to rise slightly to 66.0. Read more on consumer confidence.
Other energy prices ended lower Tuesday, with gasoline futures pulling back after a settlement 2.5% higher on Monday, the commodity's best since April 30. September gasoline futures (RBU2) settled 3 cents lower, or 0.9%, at $3.13 a gallon.
Natural-gas supply issues due to the hurricane will be brief, said Subash Chandra, an analyst at Jefferies. Moreover, hurricanes "also reduce power demand because of a cooling effect and power outages," he said.