Oil futures got a lift Tuesday as Hurricane Sally neared landfall, forcing the shutdown of more than a quarter of offshore Gulf of Mexico crude production and a number of refineries.
Nearly 27% of Gulf oil production and about 28% of natural-gas production has been shut in as of Tuesday, according to the Bureau of Safety and Environmental Enforcement reported MarketWatch.
October West Texas Intermediate oil rose $1.02, or 2.7%, to settle at $38.28 a barrel on the New York Mercantile Exchange. October natural gas , meanwhile, settled at $2.362 per million British thermal units, up 5 cents, or nearly 2.3%.
Brent up 1.09 at $40.70 – change 2.75%.
Reuters reported that the Phillips 66 PSX, -0.54% Alliance oil refinery, which processes 255,600 barrels a day of oil closed on Monday, while Shell RDS.A, +0.43% cut production to minimum rates at its 227,400 barrel-a-day refinery in Norco, Louisiana.
“The current weather system can potentially shut down as much as 1 million barrels of oil per day, mainly in the Mississippi Canyon area,” according to a report from Rystad Energy Tuesday. As opposed to the previous evacuation tied to Hurricane Laura in late August, “we only expect this situation to last for a couple of days before redeployment and restart begins.”
The report said the current estimate for the total outage associated with Sally is between three million and six million barrels of oil over approximately 11 days.