Oil drops due to the closure of US refineries due to...

• Oil prices drop due to fears of Hurricane Ida to slump in demand

• Brent crude contracts are down 46 cents, or 0.6%, to $72.95 a barrel

• US crude contracts fell 41 cents, or 0.6%, to $68.80 a barrel

Oil prices fell on Tuesday, August 31, on fears that a power outage and flooding in the US state of Louisiana caused by Hurricane Ida would reduce demand for crude from refineries, while global producers plan to increase production.

US crude contracts fell 41 cents, or 0.6%, to $68.80 a barrel at 02:45 GMT, giving up most of Monday’s gains.

As for the global benchmark Brent crude contracts for October delivery, which is scheduled to expire today, Tuesday, they also fell 46 cents, or 0.6%, to $72.95 a barrel, after increasing yesterday, Monday, by about 1%. The most active November contracts fell 42 cents, or 0.6%, to $71.81.

Prices faced pressure from the possibility that an extended shutdown of refineries would reduce demand for oil.

This caused Hurricane Ida to stop or reduce production at six refineries in Louisiana that process 1.92 million barrels per day of crude, or about 12 of the US refining capacity.

Hundreds of oil production rigs were evacuated before the storm and nearly all US oil production from the Gulf of Mexico, or 1.72 million barrels per day, was halted.

Also limiting prices is the possibility that the OPEC + group will agree, tomorrow, Wednesday, to work with a planned increase of 400,000 barrels per day in its oil production, in what will be another easing of record production cuts that it implemented last year.

OPEC delegates say they expect the group to press ahead with increasing production, although Kuwait’s oil minister said on Sunday it might be reconsidered.