Oil Gains as Storm, Weather System Threaten Gulf Oil Production

(Bloomberg) — Oil rose more than 1 percent in New York, the biggest gain in two weeks, on concern a tropical storm and a separate weather disturbance may damage oil platforms and pipelines in the Gulf of Mexico.

Royal Dutch Shell Plc evacuated staff from the Gulf as a precaution because of a tropical disturbance near the Yucatan Peninsula. Atlantic Tropical Storm Dean may become a hurricane by the end of the week, the U.S. National Hurricane Center said. In 2005, hurricanes Katrina and Rita decimated platforms and pipelines along the Louisiana and Mississippi coasts.


Dean is the first storm “that potentially could be working its way into the Gulf,” said Dominick Chirichella, an analyst at Energy Management Inc. in New York. “Everybody is focused on it. Everybody immediately has visions of Katrina and Rita.”

Crude oil for September delivery rose 76 cents, or 1.1 percent, to settle at $72.38 a barrel on the New York Mercantile Exchange. Oil was at $72.75 in after-hours trading. Futures are up 16 percent in the past three months.

A low-pressure system in the south-central Gulf of Mexico could form into a tropical depression “at any time” tonight or tomorrow, and coastal areas in its path may not have much warning, the hurricane center said in its outlook at 5:30 p.m. Miami time.

Shell expects to evacuate 100 people from the Gulf today after 88 were removed yesterday, the company said in a statement on its Web site. The company has shuttered daily natural-gas production of 5 million cubic feet a day from the North Padre Island 975 field.

Bloomberg