Oil ease up to US$86 as storm pounds US East Coast, shuts businesses, refineries

The price of oil recovered slightly Tuesday, rising above US$86 a barrel even as a massive storm pounded the heavily populated U.S. East Coast, reducing demand for fuel by keeping drivers off roads, closing businesses and silencing activity in New York City and other metropolitan areas.

By early afternoon in Europe, benchmark oil for December delivery was up 50 cents to US$86.04 a barrel in electronic trading on the New York Mercantile Exchange.

Crude oil prices fell 74 cents, or 1.3 per cent, to finish at US$85.54 a barrel Monday. The Nymex will be closed again Tuesday because of the storm, but electronic trading continues.

The biggest refineries in the northeastern United States shut down or throttled back sharply on Monday as the storm came ashore in New Jersey and hurled seawater at New York City, closing U.S. financial markets.

Analysts said the impact on demand, with power outages and the shutdown of major cities, could be significant. That impact on oil prices would only be offset partially by a drop in oil supplies, as some oil imports would be cut off.

Oil analyst Stephen Schork said in an email commentary that “with lower Manhattan in the dark, roads from Connecticut to Delaware closed and refineries shut, the lack of implied demand is overshadowing … potential supply disruptions from Sandy.”

Oil prices got some support from rising equities in Europe, boosted by some encouraging company earnings reports.

In London, Brent crude, which is used to price international varieties of oil, was down three cents a barrel at US$109.41.

In other energy futures trading in New York, wholesale gasoline fell 1.01 cents to US$2.631 a U.S. gallon (3.79 litres), natural gas lost 5.5 cents to US$3.748 per 1,000 cubic feet and heating oil was down 0.99 of a cent to US$3.0774 a gallon.