## hurricane katrina - oil prices exploding! ##, page-4

Oil prices cross 70 usd as Hurricane Katrina threatens Gulf of Mexico UPDATE 2
08.28.2005, 11:57 PM

(Updates price, adds details on US situation)



SINGAPORE (AFX) - Oil prices hit new record highs after crossing 70 usd a barrel in Asian trading hours as powerful Hurricane Katrina threatened the crude-producing Gulf of Mexico region in the US, dealers said.

At 10.15 am (0215 GMT), New York's main contract, light sweet crude for delivery in October, was trading at 69.75 usd a barrel, after touching a high of 70.80 usd earlier. It closed at 66.13 usd in US trading Friday.

'It seems to be a very crazy market,' said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. 'People worry about gasoline and crude oil supply.'

Emori said the market will await the actual impact of the hurricane on production but he believed 70-usd oil may not be sustainable because the US summer holidays are now drawing to a close, reducing gasoline demand.

'Seventy dollars is completely far away from the fundamentals,' he said. 'It's quite difficult to sustain.'

Katrina is now among the most powerful Atlantic hurricanes on record. It was expected to rage dangerously close to offshore oil platforms, most of which have been evacuated.

US President George W. Bush has declared a state of emergency in the affected region, clearing the way for federal aid, and he urged people to get out of the hurricane's path.

'We cannot stress enough the dangers this hurricane poses to Gulf Coast communities. I ask citizens to put their safety and the safety of their families first by moving to safe ground,' Bush said from his Texas ranch.

Tens of thousands of people fled New Orleans Sunday as Katrina barreled toward the low-lying southern US city with winds of 257 kilometers per hour.

It has become a rare, 'potentially catastrophic' category-five storm, the highest on the Saffir-Simpson hurricane intensity scale, the National Hurricane Center said.

Katrina ranked only at category one when it slammed ashore Thursday in south Florida, where it killed seven people before heading out to the Gulf of Mexico.

Max Mayfield, the National Hurricane Center director, warned that the biggest threats were not wind or rain, but rising Gulf waters.

'People need to understand that the greatest potential for large loss of life is from the storm surge flooding near the coastline,' Mayfield told CNN.

Akio Shibata, deputy director at Marubeni Research Institute in Tokyo, believes oil prices may climb up to 80 usd per barrel in the long-term as global demand remains brisk particularly from China.