FOX Business’ Jeff Flock follows Hurricane Laura from Lake Charles, Louisiana.
Oil and gas prices were lower Thursday morning after Hurricane Laura struck Cameron, Louisiana, as a Category 4 storm.
West Texas Intermediate crude dropped 8 cents to $ 43.31 a barrel, while RBOB gasoline slipped 2.12 cents to $ 1.3394 a gallon.
“Hurricane Laura hit a wallop,” wrote Phil Flynn, a Chicago-based senior market analyst at Price Futures Group. “The strongest hurricane in 168 years and although there are signs that the U.S. energy industry is trying to take steps to get back to normal, yet we are just beginning to assess the damage.”
POWER OUTCOMES AS LAURA BATTERS LOUISIANA COAST
Early reports indicate that refineries in the Lake Charles area, including Citgo, were hit by the storm while operations in Houston were spared.
Analysts pay close attention to floods in the region, which determine the true extent of the impact of the storm on the oil and gas industry.
The biggest concern is that flooding the Colonial Pipeline pumping stations in Beaumont and Lake Charles “would mean that gasoline produced in Houston could not reach the East Coast markets,” wrote Andrew Lipow, president of the consulting firm Lipow Oil in Houston. Associates.
OIL INDUSTRY CLOSES PLATFORMS, RIGS, REFINERIES AS STORM HITS
Beaver and Lake Charles area refineries, which were closed before the storm, account for 13% of U.S. production, or about 2.5 million barrels per day. Refineries use crude oil to make gasoline and other products.
Crude oil producers, which shut down 84% of Gulf of Mexico’s crude oil production in the days leading up to Hurricane Laura, are likely to restart Thursday. Because use was at 80% due to the shortage of demand caused by the COVID-19 pandemic, storm-saved refineries can help make up for lost production elsewhere in the region.
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According to Lipow, total production is expected to be lost over 10 million barrels.
