Hurricane Katrina pushes oil prices past US$70 per barrelMonday,...

Hurricane Katrina pushes oil prices past US$70 per barrel

Monday, August 29, 2005
WITH Hurricane Katrina bearing down on Louisiana, petroleum companies are evacuating personnel from their Gulf of Mexico production facilities and oil prices briefly rose above US$70 per barrel in electronic trading on the New York Mercantile Exchange.

US crude oil futures jumped more than US$4 in after-hours trading and GOM oil producers shut in more than a third of their output on news that Katrina had strengthened into a rare, maximum power Category 5 hurricane, the strongest since the 1935 Labor Day hurricane hit Florida Keys.

Prices for crude oil for October delivery climbed as much as $4.67 to US$70.80 per barrel on the NYME as Katrina hurtled towards New Orleans, forcing the closure of seven refineries and a major US crude import terminal.

Majors Chevron and Exxon Mobil were among those shutting offshore oil and gas production facilities, cutting production by over 633,000 barrels of oil per day (bopd) in a region that usually produces about 1.5 million barrels of oil and 10 billion cubic feet of gas per day.

Valero Energy, which owns 14 refineries in North America, said it was shutting down its St Charles refinery in Louisiana, while Chevron shut its refinery in Pascagoula, Mississippi.

The Louisiana Offshore Oil Port, the biggest US oil import terminal, stopped making pipeline shipments to refineries because Katrina had damaged its onshore pipelines.

Analysts fear Katrina's swath of destruction could do lasting damage and further strain the US energy industry already struggling to keep pace with demand. They predict Katrina could cause oil prices to remain in the US$66-plus per barrel range for at least the rest of this year.

The US National Hurricane Center upgraded Katrina to a category 5 storm earlier today and President George W. Bush has declared a state of emergency in Louisiana and Mississippi, with hundreds of thousands of people already being evacuated.

© Aspermont Limited 8/29/2005 1:41:27 AM

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