Oil Prices Climb As Katrina Bears Down on Refinery Operations
Posted on: Wednesday, 31 August 2005, 00:00 CDT
VIENNA, Austria - Crude oil futures briefly surged above $70 a barrel for the first time as Hurricane Katrina barreled today toward the heart of U.S. oil and refinery operations in the Gulf of Mexico, shutting down an estimated 1 million barrels of refining capacity.
The Category 4 storm advanced on an area crucial to the U.S. energy infrastructure - offshore oil and gas production, import terminals, pipeline networks and numerous refining operations in the southern states of Louisiana and Mississippi. After slamming ashore, it advanced toward low-lying New Orleans with winds of 145 miles per hour and the threat of an extremely dangerous storm surge.
"This is the big one," said Peter Beutel, an oil analyst with Cameron Hanover. "This is unmitigated, bad news for consumers."
The Gulf of Mexico normally produces 1.5 million barrels of crude oil a day, or about a quarter of the United States' domestic output, according to the U.S. Mineral Management Service.
Light, sweet crude for October delivery on the New York Mercantile Exchange jumped as much as $4.67 a barrel in Singapore to hit a high of $70.80 a barrel before slipping to $69.21 by afternoon in Europe. That was still up $3.16 from its close on Friday in New York.
Gasoline rose more than 20 cents, or 12 percent, to $2.1290 a gallon, while heating oil rose by more than 14 cents to $1.9790 a gallon.
Brent crude was not trading today, with London's International Petroleum Exchange closed for a bank holiday.
At its most fierce moments, hurricane Katrina bore down on New Orleans with 160 mph winds and a threat of a 28-foot storm surge, forcing a mandatory evacuation of the below-sea-level city.
Katrina has already forced the shutdown of an estimated 1 million barrels of refining capacity and curbing offshore production.
Source: Charleston Daily Mail
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