KUALA LUMPUR: Oil prices hovered around US$111 a barrel Tuesday in Asia as the threat of Hurricane Gustav dissipated but traders predicted further risks with new storms on the radar and concerns over slowing demand.
Crude oil prices tumbled Monday as Gustav weakened more than expected and appeared to have caused little damage in New Orleans and surrounding areas.
There was some disruption to oil supplies as oil companies shut down production and evacuated facilities ahead of the storm.
Altogether, about 2.4 million barrels of refining capacity had been 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 U.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, stressing that it was a rough estimate.
Light, sweet crude for October delivery stood at US$111.10 a barrel in Asian electronic trading on the New York Mercantile Exchange late Tuesday morning in Singapore.
On Monday, when U.S. trading was closed for Labor Day, the contract had plunged US$4.34 to US$111.12 a barrel in electronic trading from Friday's close of US$115.46 a barrel.
While a weaker-than-expected Gustav, which was downgraded to a tropical storm as it crossed central Louisiana, alleviated fears of a fuel shortage, traders turned their attention to other storms brewing in the region.
Hurricane Hanna was predicted to come ashore in Georgia and South Carolina late in the week, and Tropical Storm Ike formed late Monday in the Caribbean.
Ike was still about 1,400 miles (2,250 kilometers) out in the Atlantic Ocean, but was expected to become a hurricane in the next 36 hours as it approached the Bahamas.
"September is the peak of the Atlantic hurricane season. After Gustav, there are two more now on the radar screen. The storms are likely to provide some upside risks to the oil futures market,'' said Victor Shum, energy analyst with consultancy Purvin & Gertz in Singapore.
Shum said the market appear oversold and there may be potential upside when U.S. trading resumes Tuesday.
Any further dips to oil pricing may be curtailed by the Organization of Petroleum Exporting Countries, which has indicated it may take action to defend the US$100 a barrel level when it meets Sept. 9, he said.
"There are conflicting factors. The market continues to be weighed down by worries of a global economic downturn and slowing oil demand in developing markets, but action by OPEC and supply side concerns will put a backstop to any sharp price drop,'' Shum added.
Australia's BHP Billiton Ltd, which has an interest in eight projects in the Gulf, said Monday it had shut down production and evacuated personnel from its operations.
Royal Dutch Shell PLC, BP PLC and Transocean Inc. have also evacuated employees from rigs in the Gulf region.
In other Nymex trading, heating oil futures fell 10.10 cents to $3.0900 a gallon, while gasoline prices lost 10.42 cents to $2.7500 a gallon.
Natural gas for October delivery fell 39.1 cents to $7.552 per 1,000 cubic feet.
In London, October Brent crude was up 34 cents at $109.75 a barrel on the ICE Futures exchange.
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