Oil prices stay above US$67 after soaring more than US$4 overnight
AFP | September 20, 2005
SINGAPORE - Oil prices stayed above US$67 a barrel in Asian trade Tuesday ahead of an OPEC meeting and after spiking overnight as another storm threatened the oil-producing US Gulf coast region, dealers said.
The benchmark New York light, sweet crude contract for October delivery, which lapses Tuesday, was at 67.10 dollars at 3:30 pm (0730 GMT) in Singapore, down 29 cents from its finish of 67.39 dollars on Monday.
The November contract was trading Tuesday at 67.30 dollars.
In US trade Monday, oil had jumped 4.39 dollars after US the National Hurricane Center warned that tropical Storm Rita was likely to become a major hurricane over the Gulf of Mexico even as the area still struggles to recover from the devastation of Hurricane Katrina at the end of last month.
At the same time, US heating oil prices soared 11 percent and gasoline (petrol) and natural gas rocketed 14 percent on the news.
Katrina closed down US Gulf oil production and refining facilities and pushed oil to a record 70.85 dollars on August 30 but prices then eased as Washington and the major economies drew down some of their emergency reserves.
"The market panicked after what Katrina did. Investors are afraid that Rita might repeat the same damage," said Dariusz Kowalczyck, a Hong Kong-based investment strategist at CFC Seymour Securities.
He said the parallels between the two storms had scared the market, with voluntary evacuations already being called in Galveston, Texas while majors Chevron Corp., Royal Dutch Shell and BP were pulling out offshore workers as Rita approached.
Kowalczyck noted that 24 percent of US refining capacity is located near the vicinity of the storm's predicted landfall zone.
"The latest news from weather reports is that the storm will change into a hurricane," he said, adding this was heightening fears of further damage to oil refinery infrastructure.
Jorge Montepeque, global director for market reports at energy information giant Platts, told a petroleum conference here that the situation in the US market "remains extremely nervous" due to the tropical storm.
US authorities have already ordered the evacuation of several islands off southern Florida and parts of Miami, with Florida Governor Jeb Bush urging his brother President George W. Bush to declare a state of emergency.
Experts said the storm's path could eventually take it to New Orleans, which bore the brunt of Katrana's fury, and other parts of the Gulf Coast.
Meanwhile, OPEC ministers meeting in Vienna were poised to offer an extra two million barrels per day when needed in a bid to help cool down prices.
The Organization of Petroleum Exporting Countries president Sheikh Ahmad Fahd al-Sabah said he was "90 percent sure" the plan would be approved.
The two million barrels per day (bpd) will be held in reserve in case demand surges since crude markets are considered amply supplied at present.