Crude Oil Futures Hit $61 a Barrel

SINGAPORE – Crude oil futures jumped Wednesday, hitting $61 a barrel mark as Tropical Storm Emily began to churn toward the already storm-battered Gulf of Mexico oil platforms, escalating concerns over supply disruptions ahead of production for winter.

The U.S. Energy Information Administration, meanwhile, raised its demand estimates for the second half of 2005 ahead of its petroleum data snapshot release, released later Wednesday. The data could show declines in both crude and gasoline levels – a likely result from disruption caused by Emily’s predecessor, Hurricane Dennis.

Midafternoon in Singapore, light, sweet crude for August delivery on the New York Mercantile Exchange gained as much as 38 cents to hit $61 a barrel before easing to $60.92. Overnight in New York floor trade, the contract jumped $1.70 to close at $60.62 a barrel after rising as high as $61.25 intraday.

Nymex crude hit an all-time high of $62.10 a barrel July 7.

"Now it largely depends on the path and the strength of Tropical Storm Emily," said David Thurtell, commodities strategist at Commonwealth Bank in Sydney, Australia. "We’ve already seen disruption from Dennis. If you get ongoing weather problems, then just pulling staff on and off platforms is a disruption itself."

In other products, heating oil was up marginally to $1.7520 a gallon while gasoline rose by half a penny to $1.7820 a gallon. On London’s International Petroleum Exchange, August Brent rose 33 cents to $59.15 a barrel.

Hurricane Dennis rolled through the Gulf of Mexico last week, but caused minimal damage to pipelines although it forced oil companies to shut down and evacuate staff.

The Minerals Management Service said Tuesday production worth more than 800,000 barrels of crude continued to be locked in refineries as a result of Dennis. The federal agency said normal daily production in the Gulf of Mexico stands around 1.5 million barrels daily, around 30 percent of total U.S. output.

All told, the agency said Dennis forced a halt in production of nearly 5 million barrels of crude from July 8 to July 12.

The stoppage has traders fretting over its effect on supply, as demand will pick up ahead of the Northern Hemisphere winter, when heating oil, jet fuel and diesel use increase.

"Demand is already so strong, prices having very little impact on consumption at the moment. We’re waiting for supply to catch up," said Thurtell. "Traders have definitely got winter on their radars now."

Emily steamed toward Barbados in the Caribbean on Tuesday, packing maximum sustained winds of 50 mph (80 kph), the National Hurricane Center in Miami said. It could reach the Gulf of Mexico and the U.S. coastline by the weekend by which time it could turn into a hurricane, forecasters said.

The U.S. federal National Oceanic and Atmospheric Administration had predicted in May that there could be between 12 to 15 tropical storms with "seven to nine becoming hurricanes, of which three to five could become major hurricanes."

Also, an oil and natural gas platform operated by BP Plc in the Gulf was listing and found to have sustained serious damage that could cut into the company’s production for years to come. BP’s Thunder Horse platform southwest of New Orleans was set to begin producing in the fourth quarter and immediately help raise output.

On Tuesday, the U.S. Energy Information Administration, the statistical arm of the Department of Energy, revised upward its second-half 2005 estimates for world and U.S. oil demand from a month ago, citing sturdy growth expected in 2005 and 2006.

World demand for crude is estimated at 84.9 million barrels a day in the third quarter, 400,000 barrels a day higher than the June forecast. Meanwhile, fourth-quarter demand is estimated at 87.2 million barrels a day, up 500,000 barrels a day.

Oil prices are around 55 percent higher than a year ago, but are still below the all-time inflation-adjusted high of $90 a barrel set in 1980.