Crude prices dip as Rita misses crucial oil processing zones

The price of crude extended its slide in Asian trading yesterday, after Hurricane Rita narrowly missed crucial US petroleum processing zones in Texas with relatively light damage reported.

But with at least seven refineries without power in Texas and Louisiana, analysts caution such outages could lead to petroleum product shortages -- and higher prices -- with the Northern Hemisphere winter fast approaching.

The International Energy Agency (IEA), the energy watchdog for industrialized, oil-importing countries, said it could release state-held stockpiles within the week to cushion any lost output from Rita.

Mid-afternoon Singapore, front-month November contracts on the New York Mercantile Exchange fell US$0.58 to US$63.61 a barrel in Asian electronic trade that continued from an unusual Sunday session in New York. It had fallen as low as US$62.65 in light activity.

On London's International Petroleum Exchange, November Brent crude futures were US$0.51 lower at US$61.93 a barrel.

Seven in Port Arthur and Beaumont, Texas, and Lake Charles, Louisiana, were without power from Rita, which came onshore over the weekend as a 193kph hurricane after swirling as a Category 5 beast with 281kph winds in the Gulf of Mexico.

The 255,000-barrel-per-day Valero Energy Corp plant in Port Arthur appeared to be the most heavily damaged, facing at least two weeks of repairs from significant damage to two cooling towers and a flare stack.

IEA director Claude Mandil said yesterday it would decide on whether a further release of state-controlled stockpiles of crude and gasoline is warranted within a week or so based on Rita's impact.

"Rita was better than expected, but no survey has been made on the platforms," Mandil said.

The IEA's members began stockpiling crude following the oil shocks of the 1970s. After Hurricane Katrina's devastation to Louisiana and surrounding areas a month ago, the body said it make available up to 2 million barrels daily for 30 days.

Recovery Rita hinges primarily on the restoration of electricity. The area's primary utility, Entergy Corp, said 271 high-voltage transmission lines were down and 275 substations out of service, and there was no immediate timeline of when power would be restored.

``Extended US refinery outages due to storm damage could create acute product shortages. Although imports can probably offset the shortfall, they will come at a price,'' said Energyintel analyst Peter Kemp from London.

The US Minerals Management Service said Sunday that 666 platforms in the Gulf remained unstaffed, up slightly from Saturday. Oil production in the Gulf of Mexico was totally shut down, and more than 80 percent of natural gas output was off.