UPDATE 7-Hurricane cuts a quarter of U.S. Gulf of Mexico energy output, dampens fuel demand
(Updates offshore oil, gas production shut-ins)
HOUSTON/NEW YORK, Sept 16 (Reuters) - More than a quarter of U.S. Gulf of Mexico offshore oil and gas production remained shut on Wednesday by Hurricane Sally, which moved inland dumping heavy rains and cutting fuel demand in the U.S. Southeast.
The storm made landfall early on Wednesday morning near Gulf Shores, Alabama, as a powerful Category 2 hurricane, swamping the region with up to 20 inches (50 cm) of rain and boosting U.S. crude oil and gasoline prices.
Some 508,000 barrels per day of oil production and 805 million cubic feet per day (mmcfd) of natural gas output were shut in the U.S. Gulf of Mexico, according to the U.S. Interior Department. That is roughly a third of the shut-ins caused by Hurricane Laura, which landed further west in August.
The storm toppled trees, flooded streets and left 500,000 homes and businesses without electricity. The outages could reduce fuel sales in coming days, said Patrick De Haan, head of petroleum analysis at GasBuddy.
Oil and chemical ports along the Mississippi River were moving to reopen with restrictions, and oil and gas producers were returning workers to offshore platforms in the western and central Gulf of Mexico. Unstaffed offshore platforms declined by 30 to 119 on Wednesday, the Interior Department said.
The hurricane was over the Florida Panhandle and heading northeast at 5 miles per hour (8 kph) with sustained winds of 75 mph (120 kph), the National Hurricane Center said at noon CDT (1700 GMT).
Chevron Corp's Pascagoula, Mississippi, refinery, about 50 miles west of the storm's landfall, ran through the night, a spokesman said. Phillips 66's 255,600-bpd Alliance, Louisiana, refinery remained shut and Royal Dutch Shell cut production to minimum at its 227,400-bpd Norco, Louisiana, refinery.
There were 1.1 million bpd of U.S. Gulf Coast refining capacity offline on Wednesday, according to the U.S. Energy Department, including two plants under repair since Laura and another halted by weak demand due to the COVID-19 pandemic.
OIL PRICES RISE
U.S. crude and gasoline futures soared nearly 5% due to the storm impact and an unexpected drop in crude stockpiles and a larger-than-expected draw in motor fuel inventories.
"Even if the weather keeps production shut for a couple of days, the sheer volume of its size is enough for the market to breathe a bit," said Rystad Energy senior oil markets analyst Paola Rodriguez-Masiu in a comment.
The Colonial Pipeline, which brings fuel from refineries to the U.S. East Coast, was operating normally, its operator said.
The NHC warned Sally had produced "catastrophic and life-threatening" flooding along portions of the North-Central Gulf and up to 30 inches in some spots.
(Reporting by Erwin Seba in Houston and Stephanie Kelly in New York; editing by Marguerita Choy and Steve Orlofsky)
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