By Jonathan Garber FOXBusiness
The Category 4 storm made landfall in Cameron, La.
Oil and gas prices were lower Thursday morning after Hurricane Laura made landfall in Cameron, Louisiana, as a Category 4 storm.
West Texas Intermediate crude oil was down 8 cents at $43.31 per barrel while RBOB gasoline slid 2.12 cents to $1.3394 per gallon.
“Hurricane Laura packed a wallop,” wrote Phil Flynn, a Chicago-based senior market analyst at the Price Futures Group. “The strongest hurricane in 168 years and already there are signs that the U.S. Energy Industry is trying to make strides to get back to normal, yet we are just starting to assess the damage.”
POWER OUTAGES AS LAURA BATTERS LOUISIANA COAST
Early reports indicate refineries in the Lake Charles area, including Citgo, were battered by the storm while operations in Houston were spared.
Analysts are paying close attention to flooding in the region, which will determine the true extent of the storm’s impact on the oil and gas industry.
The biggest worry is that flooding of the Colonial Pipeline pump stations in Beaumont and Lake Charles “would mean gasoline produced in Houston could not make its way to the East Coast markets,” wrote Andrew Lipow, president of the Houston-based consulting firm Lipow Oil Associates.
OIL INDUSTRY SHUTS PLATFORMS, RIGS, REFINERIES AS STORM HITS
Beaumont- and Lake Charles-area refineries, which were shuttered ahead of the storm, account for 13% of U.S. output, or about 2.5 million barrels per day. Refineries use crude oil to make gasoline and other products.
Crude oil producers, which shut 84% of Gulf of Mexico crude oil output, in the days leading up to Hurricane Laura will likely restart operations on Thursday. Because utilization was at 80% due to the demand shortfall caused by the COVID-19 pandemic, refineries spared by the storm can help make up for lost output elsewhere in the region.
Total lost production is expected to be about 10 million barrels, according to Lipow.