ICS Magazine

Oil Hits New 4-Month Lows as Isabel Wanes

September 19, 2003
LONDON (Reuters) - Oil prices sank to fresh four-month lows on Friday as Hurricane Isabel weakened without causing much damage to U.S. energy infrastructure.

London Brent (LCOc1) crude was 40 cents down at $25.19 a barrel, the lowest price since mid-May. New York Mercantile Exchange October crude (CLc1) was 49 cents lower at $26.68, less than 20 cents above Thursday's 4-month low.

Refineries and pipelines on the U.S. East Coast weathered Hurricane Isabel mostly unscathed, easing fears of widespread fuel supply disruptions, oil firms and traders said on Friday.

With the exception of precautionary run cuts at two plants and the shutdown of a small refinery in Virginia, the East Coast's roughly 1.7 million barrels per day of refining capacity was untouched by the storm.

"People were expecting it to be worse," said one dealer.

The powerful hurricane crashed ashore on Thursday, moving inland from North Carolina through Washington, killing 14 and shutting off power to 4.5 million homes and businesses before weakening into a tropical storm as it raced north toward Canada.

Prices have fallen 14 percent this month as fuel stocks rose in the United States, the world's biggest energy market, easing the tight supplies that have dogged the market for most of the year.

U.S. government data on Wednesday showed record crude imports and rising fuel stocks ahead of the peak-demand winter heating season.

A further slide in oil prices could be cause for concern for the OPEC cartel, which controls around half the world's oil exports. The 11-member grouping meets on Wednesday in Vienna to review its output policies.

So far in 2003 it has enjoyed prices averaging more than $28.00 per barrel, based on a basket of crude it uses to help determine its policies.

The basket fell to $24.90 per barrel on Thursday, the first time it has been below the $25 midpoint of its target price range since May. Even so, U.S. Energy Secretary Spencer Abraham said on Friday, a cold U.S. winter could strain the nation's energy supplies and trigger renewed jumps in oil and natural gas prices.

"If we face an exceptionally cold winter, it could put a strain on our capabilities and we might face new price hikes," Abraham told Reuters in Moscow after a meeting with Russia's Atomic Minister Alexander Rumyantsev.