Brent Slips Under $109 As Hurricane Sandy's Damage is Evaluated
Brent crude oil dipped below $109 on Thursday morning, trading at $108.61. The price decrease is attributed to super storm Hurricane Sandy's devastating effects on the United States East Coast. The storm ravaged several major cities, including New York City. Millions are still without power and much of the transportation infrastructure was damaged.
Subways, highways and bridges were all affected as the storm passed through. The damage will cut down on gasoline use, as residents in these areas won't be able to drive far until repairs are made.
The storm closed two thirds of the nation's oil refineries which built up crude reserves around the world. Since the storm passed, refineries have begun working to restore power and output, but unfortunately it seems they did not weather the storm unscathed. Reuters reported that two New Jersey refineries suffered from faulty electrical power, an effect caused by excessive flooding.
Philips 66 (NYSE: PSX), one of the largest refineries on the East Coast, has been able to restore power but has not reported when they expect to restart or whether any other damage was suffered. The plant is expected to reopen next week.
The market remained wary as damages were assessed in the wake of the storm, but reports from China lent a bit of support to Brent prices. Industrial data from China showed a sluggish, but positive, improvement in October. The news suggests the number one oil consumer's economy is on the road to recovery.
Political factors also weigh on Brent prices this week as new leaders came to power in China. The market will also watch as Americans cast their vote for the next president of the United States.
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