UPDATE 9-Oil prices dip as producers, refiners avoid worst of hurricane

* WTI, Brent on track head for weekly gains
* Port of Houston set to reopen
* Refiners assess plants after storm passes
* Long-term demand outlook remains bearish
* U.S. monthly drilling rig count posts first rise since Dec

(New throughout, updates prices, market activity and shut in
data to settlement)
By Devika Krishna Kumar
NEW YORK, Aug 28 (Reuters) - Oil prices inched lower on
Friday as Hurricane Laura passed the heart of the U.S. oil
industry in Louisiana and Texas without causing any widespread
damage and companies began to restart operations.
Brent crude futures LCOc1 for October fell 4 cents to
settle at $45.05 a barrel, before expiring on Friday. U.S. West
Texas Intermediate (WTI) crude CLc1 fell 7 cents to $42.97 a
barrel.
Both benchmarks notched weekly gains of about 1.5%, with WTI
rising for a fourth straight week. The benchmarks hit five-month
highs during the week as U.S. producers cut crude output ahead
of Laura at a rate close to the level of 2005's Hurricane
Katrina. "The oil trade has been featured by strong advances at the
start of the week as a sizable amount of storm premium was
pumped into the market ahead of Hurricane Laura, followed by a
major erasure of hurricane premium following the storm's arrival
as limited impact on offshore crude production or refinery
activity was indicated," said Jim Ritterbusch, president of
Ritterbusch and Associates.
The oil market has had an unusually long spell of low
volatility, analyst Eugen Weinberg at Commerzbank said, in
contrast with stock markets.
"It didn't even react to a weaker dollar. There's no impulse
in either direction. It has seldom had so little volatility for
such a long period, especially given the dynamic situation on
the demand and supply sides," Weinberg said.
Laura, since downgraded to a tropical depression, hit
Louisiana early on Thursday with winds of 150 miles per hour
(240 km per hour). The storm killed at least six people, damaged
buildings and felled trees. Power was cut to hundreds of
thousands in Louisiana and Texas, but refineries were spared
from massive flooding. Shut offshore crude oil production in the U.S.-regulated
northern Gulf of Mexico remained at 84.3%, or 1.55 million
barrels per day (bpd), the U.S. government said in a report.
Shell said it was beginning to redeploy personnel to all
its assets in the Gulf of Mexico that were not impacted by the
storms, including those in the Norphlet and Mars Corridors.
Meanwhile nine refineries had shut around 2.9 million bpd of
capacity, or 15% of U.S. processing capacity, ahead of the
hurricane.
Valero Energy Corp VLO.N began restarting its 335,000 bpd
Port Arthur, Texas, refinery on Friday, while Exxon Mobil
XOM.N was preparing to restart its 370,000 bpd Beaumont,
Texas, refinery.
However, repairs to Citgo Petroleum's 418,000-bpd Lake
Charles, Louisiana, plant could take four to six weeks,
according to Mizuho Securities. The company did not immediately
reply to a request for comment. Late on Thursday, the Port of Houston, the top U.S. crude
oil export hub accounting for about 600,000 bpd of shipments,
was in the process of reopening to commercial shipping.
U.S. energy firms kept the number of oil and natural gas
rigs operating unchanged this week, resulting in the first
monthly increase since December as higher crude prices prompt
some producers to start drilling again. Further ahead, demand expectations remained bearish. The
contango between Brent crude for nearby delivery and six-months
ahead remained near its widest since late May with the
front-month contract more than $2 cheaper. LCOc1-LCOc7
"Aside from Saudi Arabia, everyone else is clear that global
oil demand won't return to 2019 (levels) until at least 2022.
The latest monthly estimate from the IEA/EIA/OPEC triumvirate
suggests consumption will not recover to pre-pandemic levels
next year," PVM Oil Associates said in a daily note.