Oil dips as Hurricane Laura hammers U.S. Gulf Coast

An oil refinery is situated along a highway in Big Spring, Texas.
Spencer Platt | Getty Images

Oil prices fell on Thursday as a massive hurricane in the Gulf of Mexico made landfall in the heart of the U.S. oil industry, forcing oil rigs and refineries to shut down.

Brent crude futures for October, which expire on Friday, fell 57 cents, or 1.3%, to $45.10 a barrel. West Texas Intermediate crude futures settled 35 cents, or 0.8%, lower at $43.04 per barrel.

The storm hit Louisiana early Thursday with 150 mile-per-hour (240 kph) winds, damaging buildings, knocking down trees and cutting power to more than 400,000 people in Louisiana and Texas. Its storm surge was less than predicted, sparing inland plants from feared flooding.

Oil producers on Tuesday had shut 1.56 million barrels per day (bpd) of crude output, or 84% of the Gulf of Mexico's production, evacuating 310 offshore facilities.

At the same time, refiners that convert nearly 2.33 million bpd of crude oil into fuel, and account for about 12% of U.S. processing, halted operations.

"On the one hand refinery shutdowns reduced the demand for crude oil, but at the same time Gulf of Mexico production was shut in, nearly offsetting each other," said Andrew Lipow, president of Lipow Oil Associates in Houston.

Exxon Mobil Corp said it was contacting employees of its 369,000 barrel-per-day oil refinery and chemical plant in Beaumont, Texas, and preparing a preliminary tally of damages. The large plant was one of six plants along the Gulf Coast's refinery row that shut this week ahead of the storm.

"These guys have gone through these drills many times," said Jennifer Rowland, senior analyst at Edward Jones in St. Louis. "They know how to turn those units down and get them back up within a number of shouldn't be that big of an impact," she added.