July 7, 2005

Oil off $1.50, after London attacks

LONDON (Reuters) - Oil prices fell 2.5 percent on Thursday
after a series of explosions across central London's public
transport system that appeared to be a co-ordinated terror

U.S. crude fell to a low of $57.20, recovering by
1135 GMT for a loss of $1.49 at $59.79 a barrel.

Crude set a new record high of $62.10 just before the
attacks on worries about the impact on oil supply of a
hurricane in the U.S. Gulf.

Brent crude in London fell to a low of $55.55
before recovering to $58.25 a barrel, down $1.60 on the day.

British Prime Minister Tony Blair said it was "reasonably
clear" that London had been hit by terrorist attacks.

Dealers said that if the explosions were an attack an
economic downturn might result, similar to that following the
September 11, 2001 attacks in the United States.

"The market is interpreting this as a re-acceleration in
al- Qaeda activity which could lead to global economic
slowdown," said Deborah White of SG Securities.

"If this is our 9/11 then the market will sell off very
heavily on that," said Nigel Saperia of trading house Glencore.

Earlier oil set new records on the approach of a hurricane
toward U.S. Gulf oil production and refining facilities.

Tropical storm Dennis was upgraded on Wednesday to become
the season's first Atlantic hurricane as it moved through the
central Caribbean.

That put it on track for the oil and natural gas fields off
the Gulf Coast on Sunday, the National Hurricane Center said.

Tropical storm Cindy this week forced energy companies to
shut in some 190,000 barrels per day (bpd) of output and some
refinery units to close.

The unusually early appearance of four named storms backed
up forecasts of an active Atlantic hurricane season.

Last September's hurricane Ivan knocked out 45 million
barrels of Gulf output over several months and helped oil
prices climb past $50 a barrel for the first time.