Crude oil prices rose toward $110 a barrel today (Oct. 29), supported by worries of potential supply disruption on the U.S. East Coast being battered by Hurricane Sandy, although fears of weaker demand from the storm-hit region capped gains.
Reuters reported that U.S. refinery and pipeline companies will begin assessing the storm damage, hoping their flood defenses and on-site power would allow operations to resume swiftly.
But even if refineries escape unscathed, any damage to the vast network of oil terminals, pipelines and trucking facilities in the region could complicate supply logistics.
Brent crude for December rose 13 cents to $109.57 a barrel in early trading, recovering from a fall to $108.75 earlier in the session. U.S. crude for December was up 40 cents at $85.94.
U.S. gasoline futures were little changed at $2.7530 a gallon, after climbing more than 5 cents on Monday on expectations of tighter supply.
“The shutdown of refineries basically means that there are breaks in the supply chain,” said Michael Hewson, senior markets analyst at CMC Markets. “(This) means there will be a little bit of scarcity, so that can still underpin prices.”
Fuel supply into the region ground almost to a halt with the closure of two-thirds of the region’s refineries, its biggest pipeline and most major ports.