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Oil Prices Jump $1 a Barrel

Posted on: Monday, 17 October 2005, 03:00 CDT

By GILLIAN WONG

SINGAPORE - Crude oil futures jumped more than $1 a barrel Monday, driven up by concerns that a tropical depression brewing in the Caribbean could grow into a hurricane and threaten oil facilities in the U.S. Gulf of Mexico.

Light, sweet crude for November delivery rose $1.10 to $63.73 a barrel in Asian electronic trading on the New York Mercantile Exchange. On Friday, the contract slipped 45 cents to $62.63 a barrel.

Heating oil gained 4.54 cents to $1.9954 a gallon while gasoline climbed 5.44 cents to $1.8030. Natural gas rose $0.601 to $13.820 per 1,000 cubic feet.

Tropical Depression 24, a slow-moving system formed Saturday, was expected to become Tropical Storm Wilma, which would make it the 21st named storm of the season, tying the 1933 record for the most storms in an Atlantic season, the National Hurricane Center in Miami said Sunday.

The depression, now centered about 150 miles southeast of Grand Cayman, could grow into a hurricane by Tuesday and move into the southeastern Gulf, with winds over 100 mph by Friday, the center said.

Most U.S. oil production and refineries are in the central and western Gulf. Forecasting the storm's direction is extremely difficult at this early stage, but traders are nervous about yet more damage to oil facilities after Hurricanes Katrina and Rita.

"The tropical depression is certainly within the radar screens of traders, though it seems to be too early to tell whether it would develop into a storm, and its direction," said Victor Shum, energy analyst at Texas-headquartered Purvin & Gertz in Singapore.

After surging above $70 a barrel in late August, oil prices have pulled back in recent weeks, although there are still plenty of concerns about the pace of recovery following Rita, and whether supplies will be adequate going into the Northern Hemisphere winter months, when demand for heating oil peaks.

"The market is on edge; it's looking for directions. There's a lot of volatility now, which is characteristic of a tight supply situation," Shum said.

The U.S. federal Minerals Management Service reported Friday a slight uptick in Gulf of Mexico oil production, putting the amount of shut-in output at about 1 million barrels a day, or 67.3 percent of total daily output, down slightly from 68.8 percent Thursday.

There was virtually no improvement in natural gas output, with some 5.65 billion cubic feet a day of output off line, or 56.5 percent of the total, the minerals service said in a daily update.

In other market-related news, PetroChina Co., Asia's largest integrated oil firm, said Monday its oil and gas output in the third quarter rose 5.3 percent from the year-earlier period on strong demand.

PetroChina, which is China's second largest refiner by capacity after Sinopec, said its oil and gas output rose to 241.6 million barrels of oil equivalent between July and September this year, up from 229.6 million reported for the same period last year.

China is the world's second-largest oil consumer after the United States. However, it doesn't produce enough to meet demand and imports nearly 40 percent of the oil it consumes.

Source: Associated Press/AP Online

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