Oil has its first close above $80 a barrel
Oil prices closed Thursday above $80 a barrel for the first time and gasoline prices rose as refiners reported production problems after Hurricane Humberto hit Texas.
Oil first traded over $80 a barrel a day earlier, after the Energy Department reported declines in crude and gasoline inventories and a drop in refinery activity, but closed below that psychologically important mark.
On Thursday, Humberto added to the supply concerns by cutting power to several refineries in the Port Arthur, Texas, area.
Another tropical system gaining strength in the Atlantic also supported prices.
Light, sweet crude for October delivery finished at a record $80.09 a barrel, up 18 cents on the New York Mercantile Exchange and above the previous record close of $79.91 set a day earlier. In addition to closing at a record high, the October oil contract also set an intraday record of $80.20 a barrel Thursday, 2 cents above the previous trading high set Wednesday.
Despite the gains, oil is still well below inflation-adjusted highs hit in early 1980. Depending on the adjustment, a $38 barrel of oil in 1980 would be worth $96 to $101 or more today.
The shuttered refineries included Valero Energy Corp.'s 325,000 barrel-a-day facility, Total’s 180,000 barrel-a-day plant and Motiva Enterprises’ refinery, which can process 285,000 barrels of oil a day. Exxon Mobil Corp. said its 350,000 barrel-a-day Beaumont, Texas, refinery suffered a minor production outage but remained up and running.
The outages boosted October gasoline futures 3.04 cents to settle at $2.046 a gallon.
Oil’s run-up has come despite OPEC’s decision Tuesday to boost output by 500,000 barrels starting Nov. 1, a move driven in part by concerns that high oil prices are hurting the global economy. Some analysts are perplexed by the high prices, arguing that they have been driven by a flood of speculative buying.
“The world economy in the last few years has shown to be quite resilient to strong oil pricing, but this is certainly a new territory for crude oil, and if sustained, there is bound to be some impact on the economy,” said Victor Shum, an energy analyst at Purvin & Gertz in Singapore.
James Cordier, president of Liberty Trading Group in Tampa, Fla., notes that oil prices often peak in September and follow demand lower in the fall.
“We’re really wondering where demand will come from to support $80 crude oil,” Cordier said.