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Georges' effect rallies oil
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September 29, 1998: 5:20 p.m. ET
Refiners see nasty effects of storms that battered plants on Gulf of Mexico coast
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NEW YORK (CNNfn) - Crude-oil prices rallied Tuesday as refiners crept back into Gulf of Mexico plants to find the nasty spectacle of Hurricane Georges' flood damage.
The Nymex light sweet crude-oil futures contract for delivery in November climbed 34 cents to settle at $15.98 cents per barrel. That equaled a three-month high set last week.
Prices rose ahead of the release of key data about how much U.S. producers tapped into their crude oil stocks while Hurricane Georges and other Gulf of Mexico storms struck.
The American Petroleum Institute was expected to report a draw of as much as 1 million barrels from crude-oil stocks last week, said one oil analyst.
"A lot of it can be attributed to the storm and the overall change in tone we have seen in the last few weeks in fundamentals," said Scott Ryll, a crude-oil and energy analyst with GSC Energy in Atlanta.
"We had a disruption at the main import center - the LOOP," said Ryll, referring to the Louisiana Offshore Oil Platform, a key deep-water port for heavy tankers offloading U.S-bound oil.
Meanwhile, refining giant Chevron said Tuesday its Pascagoula, Miss., refinery just west of Mobile, Ala, was "partially flooded" in the wake of the hurricane as it dumped dozens of inches of rain onto towns along the Gulf of Mexico coast.
Reuters reported parts of the plant got swamped under at least three feet of water, which was reminiscent of situations leading to production lags in years past.
The Chevron plant is the largest of several such refineries scattered across the Gulf Coast. Mobil, Murphy, Shell, Total, and BP America were among the companies that closed plants in the region over the past several days.
Also lurking in the minds of traders were reports that Iraq, a top crude producer, was trying to reach a compromise with the United Nations about weapons inspections. Any such deal could open the window for Iraq to sell more oil on the world market.
"That is certainly an issue, but not the primary focus right now," Ryll said. "This ongoing saga with Iraq has kind of grown tiresome and hasn't had a lot of significance."
More importantly, Organization of Petroleum Exporting Countries (OPEC) producers have so far been holding to their plans to curb their output, Ryll said. "But the higher prices go, the higher the likelihood they will break the deal."
Georges doesn't help cotton
Cotton dropped to near four-week lows on signs crop damage due to Georges wasn't as bad as first thought.
The New York Cotton Exchange cotton futures contract for December delivery sank 1.46 cents, or 2 percent, to settle at 72.91 cents a pound.
Georges reportedly spared key cotton-producing areas in Mississippi and was not as harmful to fields in Alabama.
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