Oil below $86 as US refineries survive hurricane

[August 29, 2011]  LONDON (AP) -- Oil prices edged up toward $86 a barrel on Monday after a hurricane left minimal damage among refineries along the U.S East Coast.

Benchmark oil for October delivery was up 5 cents at $85.42 at midday European time in electronic trading on the New York Mercantile Exchange. Crude rose 7 cents to settle at $85.37 on Friday.

In London, Brent crude for October delivery was down 23 cents at $111.13 on the ICE Futures exchange.

Tropical Storm Irene packed hurricane-force winds when it slammed into the East Coast near North Carolina this weekend and headed north into New York. The storm was blamed for at least 21 deaths, widespread severe flooding and more than 4 million homes and business losing power.

Oil refineries in the region have so far reported no major damage.

The National Hurricane Center said Monday that Irene was maintaining 50 mph (80 kph) maximum sustained winds as it neared the U.S.-Canada border.

"The greatest impact from the storm is likely to be the impact on regional economic activity caused by flooding and power outages," J.P. Morgan said in a report. "These could take some time to restore to normal, and is therefore likely to reduce petroleum demand in the interim."

After jumping from $84 in February to near $115 in May then sliding back down to $76 earlier this month, crude has traded close to $85 for the past week as traders look for evidence of the severity of the slowdown in economic growth in the U.S. and Europe.

Crude prices were supported somewhat by a rise in world stock markets, driven by comments by Federal Reserve Chairman Ben Bernanke. The central bank chief didn't propose any new steps to stimulate the economy during a speech in Wyoming on Friday but suggested the government should offer help.

In other Nymex trading for October contracts, heating oil fell 0.8 of a cent to $3.01 per gallon and gasoline futures dropped 2.5 cents to $2.76 per gallon. Natural gas for September delivery slid 2.8 cents to $3.90 per 1,000 cubic feet.

[Associated Press]

Alex Kennedy in Singapore contributed to this report.

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