Hurricane Dolly hits gas output

HOUSTON (Reuters) - A stronger Hurricane Dolly slowly steamrolled across the Texas coast on Wednesday, cutting production at some oil refineries but missing most offshore oil and natural gas production facilities in the Gulf of Mexico.

Dolly was having a greater impact on offshore natural gas production, while oil output made a small recovery on Wednesday, the U.S. Minerals Management Service said.

Producers had shut 4.5 percent of oil production, down 0.2 percent from Tuesday, while 7.9 percent of gas output was closed, up 2.8 percent, the MMS said.

Restoring full production depends on when weather clears enough for helicopters to fly back out to platforms, the companies said.

Anadarko Petroleum began flying workers back to its Nansen and Boomvang spar platforms, which produce a combined equivalent of 20,000 barrels of oil in liquids and natural gas, the company said.

Valero Energy said the loss of crude supply because tankers could not move through the Houston Ship Channel led the company to reduce production between 10 percent and 20 percent at its refineries in Houston and Port Arthur, Texas.

The port serving the major refining centre of Corpus Christi, Texas, was also closed to ship traffic, although refineries served by that waterway said operations were continuing.

U.S. crude oil futures were unaffected by the Category 2 hurricane packing winds of 100 miles per hour (160 kph).

Oil prices were off more than $4.00 (2 pounds), under $125 per barrel despite Dolly and a bullish U.S government report showing a larger than expected cut in crude inventory.