- The Washington Times - Monday, September 15, 2008

Crude oil fell to a six-month low in New York and gasoline tumbled amid signs that refineries along the Gulf of Mexico coast will soon resume operations after escaping major damage from Hurricane Ike.

More than 20 percent of the U.S.’s oil refining capacity was shut, limiting fuel deliveries and prompting the Department of Energy to release 309,000 barrels from its strategic reserves.

New York Mercantile Exchange electronic trading opened early Sunday to allow traders to respond to Ike.

“It looks like we’ve dodged another bullet,” said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Conn. “The refineries in the Houston area seem to have come out of the storm remarkably intact.”

Crude oil for October delivery fell $2.18, or 2.2 percent, to $99 a barrel at 4.26 p.m. on the Nymex. Futures touched $98.46, the lowest since Feb. 26.

Prices are up 25 percent from a year ago. Gasoline for October delivery fell 10.86 cents, or 3.9 percent, to $2.661 a gallon in New York.

CME Group Inc., the world’s biggest futures exchange, began Nymex electronic trading of energy contracts at 10 a.m. New York time today.

Oil in New York has fallen 33 percent from a record $147.27 a barrel on July 11 as high prices and slowing global economic growth reduce demand for fuels. Sales at U.S. retailers dropped in August for a second straight month and July inventories at American businesses increased the most in four years, Commerce Department reports showed last week.

“Growing fears about the economy are trumping any fears about the damage caused by Hurricane Ike,” said John Kilduff, senior vice president of risk management at MF Global Inc. in New York. “The broader issue is the weakness of the financial system. Given the Lehman and WaMu watch, cash looks better than any speculative investment.”

Barclays PLC, Britain’s third-biggest bank, pulled out of talks to buy Lehman Brothers Holdings Inc. Sunday as the U.S. government raced to find a solution for the faltering investment bank. Washington Mutual Inc. plummeted in New York trading last week on speculation about its financial health.

Fourteen refineries in Texas and one in Louisiana, including plants operated by Exxon Mobil Corp., Valero Energy Corp. and Royal Dutch Shell Plc, shut 3.86 million barrels a day of refining capacity as Ike approached the Gulf Coast.

Valero said it found “no significant structural damage” at three Houston-area refineries shut before the storm. One Valero refinery had power, the company said. Marathon Oil Corp. and Motiva Enterprises LLC said they’re evaluating their plants.

Colonial Pipeline Co. said Sunday it restored operations to its gas and distillate pipelines, which carry from the Gulf Coast to the Northeast.

Regular gasoline, averaged nationwide, rose 6.2 cents to $3.795 a gallon, AAA, the nation’s largest motorist organization, said Sunday on its Web site. Pump prices reached a record $4.114 a gallon on July 17.

Pump prices in the Southeast surged as the Ike made landfall. Regular gasoline in Georgia rose 16.2 cents to an average $4.025 a gallon, the AAA said Sunday.

In North Carolina, regular gasoline climbed 11.1 cents to $3.973 a gallon.

“The crude oil price should be lower because with the refineries down, there is nowhere for it to go,” Mr. Kilduff said. “The drop in product prices may be short-lived because some of these refineries could be down for weeks.”

Heating oil dropped 9.11 cents, or 3.1 percent, to $2.848 a gallon. Heating oil touched $2.8325 a gallon, the lowest since March 5. Trades of all the futures contracts will be recorded as part of the Sept. 15 session.

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