Commodity Corner: Oil Falls As Refinery Flood Fears Wane
Thanks in part to flood control measures that appear to be relieving pressure on the levee system protecting major South Louisiana refineries from Baton Rouge to New Orleans, the June contract price for a barrel of crude oil fell 2.3 percent Monday to $97.37.
The U.S. Army Corps of Engineers on Saturday began opening the Morganza Flood Control Structure to divert some of the flow from the swollen Mississippi River into the Atchafalaya Basin. As of noon local time on Monday, 11 of the structure's 125 gates had been opened. The Corps has lowered somewhat its crest projections for the Mississippi at locations downstream from the structure. This suggests that the action initiated Saturday, combined with drought conditions that the Corps had not factored into earlier flood scenarios, could be placing less strain on the levee system than previously anticipated.
June crude oil traded within a range from $96.89 to $99.65 Monday.
Monday's developments eased fears among traders about the flooded Mississippi's potential threat to refineries near the levees, contributing to sharp drop in gasoline futures.
Gasoline for June delivery lost 14 cents to settle at $2.93 a gallon. It peaked at $3.08 and bottomed out at $2.92.
Front-month natural gas, buoyed by the lowest natural gas rig count in more than a year, gained seven cents to end the day at $4.32 per thousand cubic feet.
June natural gas fluctuated from just below $4.20 to $4.34.