Oil price rises to near US$71 after Hurricane Katrina
(Xinhua)
Updated: 2005-08-31 11:22

Oil price, which crossed the 70-dollar mark in electronic trading Wednesday, was trading at the high of 70.50 dollars per barrel amid worries over Hurricane Katrina's impact on US oil production.

At 7:00 am (2300 GMT) in Singapore, New York's main contract, light sweet crude for delivery in October was trading at 70.50 dollars per barrel, up 69 cents from its finish of 69.81 dollars in New York on Tuesday.

Light sweet crude price for October delivery surged to an all-time record high of 70.90 dollars before settling at 69.81 dollars per barrel in New York Tuesday, the highest since trading began in 1983, amid reports of drifting oil rigs and flooded refineries.

Meanwhile, the price of Brent North Sea crude oil for delivery in October hit a historic peak of 68.27 dollars Tuesday. It was its first ever stand above 67 dollars, beating its previous high of 66.85 dollars on August 15.

Heating oil and gasoline futures also reached peaks on the New York Mercantile Exchange. Gasoline trading on the NYMEX on Tuesday was halted briefly after the contract gained the maximum allowed.

Oil prices are now more than double the levels reached in 2003.

Hurricane Katrina killed at least 50 people, shut nearly all of the Gulf of Mexico's oil production and 88 percent of natural gas output in the Gulf of Mexico -- about a quarter of the nation's oil output -- and closed down nine refineries along the coast. A total of 735 oil and natural-gas rigs and platforms remained evacuated, according to the federal Minerals Management Service.

Two Louisiana tanker terminals badly affected by the storm -- Port Fourchon and the Louisiana Offshore Oil Port -- together handle more than 20 percent of all the crude oil imported into the United States.

A US Senator who flew over southeastern Louisiana on Tuesday said three of those oil refineries in Louisiana were "under water" due to flooding caused by Hurricane Katrina.

They included Murphy Oil's 120,000 barrels-per-day (bpd) refinery in Meraux, Exxon Mobil's joint venture 190,000 bpd refinery in Chalmette and Exxon's 247,000 bpd plant in Belle Chasse.

Several drilling companies, including Ensco, Transocean, and Noble, reported rigs adrift after the storm.

Energy analysts said oil prices could soar as high as 80 dollar a barrel and drivers in the US could soon be paying 3 dollars a gallon for gasoline if damage reports from oil companies bear bad news.

"It's not out of the question that 80 dollars could be the next barrier if there's long-term damage," said Gerard Burg, minerals and energy economist at National Australia Bank.

The US department of energy said it was considering an oil industry request to open up its Strategic Petroleum Reserve after Hurricane Katrina battered crude production sites in the country's south.

OPEC's biggest crude oil producer, Saudi Arabia, pledged an extra 1.5 million bpd of oil to the international market if needed.

The Paris-based International Energy Agency said on Tuesday it could release crude or fuel from its emergency reserves if the impact of Katrina causes a severe crunch.