Refineries scale back; oil prices fall

Associated Press

The biggest refineries in the Northeast shut down or throttled back sharply Monday as Hurricane Sandy moved in. Oil prices fell as it appeared the massive storm will reduce demand by keeping drivers off the road and shutting businesses.

Owners of the six-biggest refineries in the Northeast shut down two and cut production at most of the others. That includes a full shutdown of the Phillips 66 refinery in Linden, N.J., the second-biggest in the Northeast at 285,000 barrels per day. The biggest refinery in the area, Philadelphia Energy Solutions, was nearly shut.

Sandy is powerful enough to down trees and power lines and cause widespread flooding. Businesses also could be closed for days. If so, demand for gasoline and other oil products would drop sharply.

The power outages and the shutdown of major cities “may take a toll on demand unlike anything we have seen before,” wrote Phil Flynn, a senior market analyst for Price Futures Group, in a report Monday.

Crude-oil prices fell 74 cents, or 1.3 percent, to finish at $85.54 a barrel in trading on the New York Mercantile Exchange.