PARIS - Crude prices climbed on Monday as supply of oil and gas from the Gulf of Mexico was curtailed after Tropical Storm Isaac forced the closure of production facilities in the region, analysts said.
London’s financial markets were closed for a public holiday, but in afternoon electronic trading the price Brent North Sea crude for delivery in October gained 58 cents from Friday’s close to stand at $114.17.
In electronic trading on the New York Mercantile Exchange the price of light sweet crude for October delivery jumped $1.22 to $97.37 a barrel.
The shutdown and evacuation of personnel from oil rigs in the Gulf of Mexico as Isaac approached was fuelling a crude rally, said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
“In the Gulf of Mexico there is this tropical storm... that’s threatening the region and has already caused some precautionary shut down of the production facilities there,” he told AFP. “And so (this) is the main factor supporting oil at this point,” Shum added.
The Gulf of Mexico is the hub of US offshore energy production, accounting for 23 percent of US crude oil output and 7.0 percent of US natural gas production. The Gulf coast’s facilities also represent more than 40 percent of total US petroleum refining capacity and 30 percent of natural gas processing plant capacity. BP said Sunday it was shutting down production at all of its oil and gas platforms in the Gulf of Mexico and evacuating all staff amid forecasts that Isaac was set to strengthen into a a category two hurricane.
The shutdown includes BP’s Thunder Horse platform, the world’s largest offshore production and drilling facility, which has a capacity of 250,000 barrels of oil and 200 million cubic feet of natural gas per day.
Chevron — the second-largest oil producer in the Gulf of Mexico behind BP — also said Sunday it was evacuating staff from some offshore facilities.
Royal Dutch Shell said it was preparing for evacuations of non-essential personnel from platforms and had suspended some drilling operations.
Meanwhile, three US Gulf Coast states also declared states of emergency on Sunday as Isaac barreled towards land, threatening to slam into Louisiana as a full-blown hurricane.
The governors of Louisiana, Mississippi and Alabama issued their declarations as Florida, which went on a state of emergency a day earlier, was drenched by heavy rains and strong winds from the storm.