Oil sinks on storm-related supply concerns

AP News
Posted: Nov 02, 2012 3:46 PM
Oil sinks on storm-related supply concerns

NEW YORK (AP) — Oil closed Friday at its lowest point in almost four months as two Northeast refineries remained shut after Superstorm Sandy. With production of gasoline and diesel reduced, and demand dropping off in the storm-stricken region, there is a likelihood that the nation's already ample supplies of oil will grow.

Benchmark crude fell $2.23, or 2.2 percent, to close at $84.86 — its lowest level since July 10.

Major refineries owned by Phillips 66 and Hess Corp. still aren't operating four days after the massive storm hit. The two have the combined capacity to refine almost 310,000 barrels of oil a day.

Philadelphia Energy Solutions says its refinery complex has been restarted with delivery delays. But the delivery of fuel throughout the New York area has been stifled by the severe damage and power outages left in the wake of the storm.

"Even if there is demand we can't get it where it needs to go," Energy analyst Phil Flynn said.

The concerns overshadowed a better-than-expected report on the labor market in October.

The Labor Department said Thursday that employers added 171,000 jobs last month, although the unemployment rate ticked up to 7.9 percent. More jobs were also added in the previous two months than was first reported.

That suggests the slow economic recovery remains on track.

Flynn said the stronger jobs numbers drove the value of the U.S. dollar higher. That tends to make investments like oil and other commodities less attractive.

Brent crude, which is used to price international varieties of oil, dropped $2.49, or 2.3 percent, to $105.73 in London.

Although gas prices rose slightly in New York and New Jersey, the national average for a gallon of gas slipped a penny to $3.496 a gallon. It's down 8 cents in the last week.

In other trading in New York:

— Wholesale gasoline futures dropped 6 cents to $2.57 per gallon.

— Heating oil fell 9 cents to $2.95 per gallon.

— Natural gas dropped 14.5 cents to $3.55 per 1,000 cubic feet.