Oil prices ease as Isaac spares refineries

Oil prices eased on Wednesday as the impact of hurricane Isaac on refineries on the U.S. gulf coast appeared to be moderate, and G7 finance minister called on producers to increase output.

Oil for October delivery fell66 cents to $95.67 US on the New York Mercantile Exchange. That same contract had risen 86 cents totrade at $96.33 a day earlier, as Isaac was preparing to make landfall.

The Category 1 hurricane is currently passing over areas around New Orleans and remains a threat to humans. But its impact on the oil industry, which is clustered around oil rigs in the Gulf of Mexico and refineries on the coast, appears to be relatively mild at this point.

Most refineries and offshore oil rigs were able to implement organized shutdowns. That means while production was temporarily halted, they are better able to get back online in an organized fashion not what would happen in case of any sort of emergency shutdown.

Output increase possible

Meanwhile, a statementreleased by the Group of Seven finance ministers and posted on the U.S. Treasury Department website late Tuesday said the ministers were concerned about the impact of rising oil prices on the global economy and were prepared to act.

"We encourage oil-producing countries to increase their output to meet demand," the statement said. "We stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied."

The Obama administration has also said it would consider releasing oil from the country's emergency reserves to keep fuel prices in check.

U.S. oil prices have gained about 22 per cent since the start of June. That's translated into higher gasoline prices for consumers at the retail level. The average price of Canadian gasoline has increased by more than three cents per litre since late last week, the Gasbuddy.com website shows.

In other energy trading, heating oil fell 2 cents to $3.109 per gallon. Natural gas fell nearly 2 cents to $2.597 per 1,000 cubic feet.