Oil prices pared early gains on Monday, retreating from more than three-week highs reached earlier in the session, as powerful Hurricane Ida smashed into the US Gulf of Mexico coast, forcing authorities to close and evacuate hundreds of offshore oil rigs.
Brent crude rose five cents, or 0.4 percent, to $72.75 a barrel by this morning. Crude rose more than 11 percent last week in anticipation of a disruption in oil production due to Ida.
US West Texas Intermediate crude turned lower and fell 31 cents, or 0.5%, to $68.43 a barrel, after jumping a little more than 10% last week, according to what was published by "Reuters".
The two benchmarks hit highs not seen since August at $73.69 and $69.64, respectively, earlier in the session, as Ida swept the coast near Port Fortune, Louisiana, the center of the offshore energy industry in the Gulf of Mexico.
"It is still too early to know the full impact of Cyclone Ida," said Vivek Dhar, a commodities analyst at the Commonwealth Bank of Australia.
"Oil products, such as gasoline and diesel, are likely to rise in prices at a sharp pace due to the refineries' shutdown, especially if there are difficulties in restoring refineries and pipelines," he added.
Gasoline prices in the United States rose more than 3 percent as blackouts added to the shutdown of refineries on the Gulf Coast and the focus shifted to crude products. Analysts say crude prices have also fallen in anticipation of a likely rapid recovery in oil production.
By Sunday, energy companies had shut down 95 percent of oil production, or 1.74 million barrels per day, in the US Gulf of Mexico, according to the Office of Safety and Environmental Enforcement, as Ida headed toward drilling rigs and other infrastructure.
Gulf supplies account for about 17 percent of the oil in the United States.
A regulator said oil and gas companies had evacuated about 300 offshore facilities and moved 10 drilling ships out of danger.
The National Hurricane Center said Ida hit the coast near Port Fortune, Louisiana, at 1655 GMT Sunday after becoming a severely dangerous Category 4 hurricane.