Oil price increase in wake of superstorm
NEW YORK, USA (AP) - Oil prices rose Wednesday on concerns about near-term oil supplies in the US following a fierce storm that caused havoc across the northeastern part of the country and was threatening to inflict more damage inland.
By early afternoon in Europe, those concerns helped benchmark crude for December delivery rise 65 cents to US$86.33 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 14 cents to finish at US $85.68 a barrel in New York.
In London, Brent crude, used to price many international varieties of oil, was up 38 cents to US$109.46 per barrel on the ICE Futures exchange.
A hurricane that evolved into a winter superstorm, Sandy cut power to more than eight million homes, shut down 70 per cent of East Coast oil refineries and inflicted worse-than-expected damage in the New York metropolitan area. That area produces about 10 of US economic output.
Sandy came ashore Monday evening in New Jersey, dumped heavy rain inland in Pennsylvania on Tuesday and was expected to turn toward New York state and Canada overnight.
The storm will end up causing about US$20 billion in property damages and $10 billion to $30 billion more in lost business, according to IHS Global Insight, a forecasting firm.
Widespread power outages and transportation disruptions, and hazardous driving conditions would likely reduce demand for energy. But analysts said crude imports will likely be reduced until East Coast ports reopen.
"So even if refineries were able to get up and running soon, there's a good chance we won't have the feedstock to keep them going," Carl Larry of Oil Outlooks and Opinions.
Analysts noted that it was too soon to judge the longer-term effect Sandy will have on oil prices
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