NEW YORK — Oil prices plunged today, falling to within sight of $100 a barrel a day after Hurricane Gustav tore through the Gulf of Mexico but appeared to spare oil and gas installations of massive damage.
Light, sweet crude for October delivery fell $7.73 to $107.73 a barrel on the New York Mercantile Exchange, after earlier dropping as low as $105.46. The last time prices hovered in that range was in early April before a historic run-up above $147 per barrel. Earlier in the session prices had dropped as low as $105.46.
On Friday, the contract settled at $115.46 a barrel as Gustav approached the U.S. Gulf coast, a key region for oil drilling and refining. But traders were relieved that Gustav weakened as it neared the offshore oil rigs and Louisiana refineries, and appeared to have caused less damage than expected in New Orleans and surrounding areas.
As Hurricane Gustav dissipated, traders quickly turned their attention to slowing global economic growth, speculating that demand for crude will be dampened even in rapidly expanding China and India.
“The market continues to be weighed down by worries of a global economic downturn and slowing oil demand in developing markets,” said Victor Shum, an energy analyst with consultancy Purvin &Gertz in Singapore. “Action by OPEC and supply side concerns should put a backstop to any sharp price drop.”
The Organization of Petroleum Exporting Countries is scheduled to meet Sept. 9 in Vienna and has indicated it may take action to defend the $100 a barrel level.
Ahead of Gustav, there was some disruption to oil supplies as oil companies shut down production and evacuated facilities. Altogether, about 2.4 million barrels of refining capacity was halted, roughly 15 percent of the U.S. total, according to figures from Platts, the energy information arm of McGraw-Hill Cos. The Gulf Coast is home to nearly half of the nation’s refining capacity.
It could be a day or more before oil and natural gas companies can assess the damage to their drilling and refining installations. Louisiana Gov. Bobby Jindal said as much as 20 percent of oil and gas production that was stopped because of Gustav could be restored by this weekend, but he also stressed that it was a rough estimate.
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