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Storm Fear Has Oil Price Soaring

Posted on: Tuesday, 20 September 2005, 12:00 CDT

NEW YORK -- Crude-oil futures surged more than $4 -- the biggest one-day price jump ever -- amid worries that Tropical Storm Rita strengthening off the Bahamas could hit U.S. oil facilities in the Gulf of Mexico later this week, striking another blow at an industry struggling to recover from Hurricane Katrina.

The swells in crude, heating oil and gasoline futures came as OPEC ministers met to discuss how to relieve price pressures in the oil market and expressed concern that Rita would bear down on the hurricane-ravaged U.S. Gulf Coast.

Benchmark light, sweet crude for October delivery rose $4.39, or 7 percent, to settle at $67.39 a barrel on the New York Mercantile Exchange.

Nymex crude -- still more than $3 off its all-time high of $70.85 hit briefly on Aug. 30 after Katrina hit the Gulf -- had fallen $1.75 on Friday to its lowest closing price since Aug. 5.

Heating oil surged more than 20 cents to $2.0384 a gallon, while gasoline rose nearly 26 cents to $2.0427 a gallon.

Brent crude for October delivery rose $3.80 to $65.61 on London's International Petroleum Exchange.

In Florida, thousands began evacuating the Florida Keys as Rita built up speed off the Bahamas about 380 miles from Key West. Long- range forecasts showed the system moving into the Gulf of Mexico late in the week as a hurricane, then possibly approaching Mexico or Texas.

But forecasters warned those across the U.S. southern coast, which is still recovering from the impact of Hurricane Katrina, that long-term predictions are subject to large errors.

If Rita strikes Texas, the biggest oil refiner in the country, it could spell serious disruption to the industry.

Texas has 26 petroleum refineries, most of which are along the coast, with the capacity to pump 4.6 million barrels a day.

That's more than a quarter of the U.S. total refining capacity, according to the U.S. Department of Energy.

Chevron Corp. and Shell Oil began evacuating workers Monday from offshore oil and gas platforms and drilling rigs in the Gulf.

A total of five rigs evacuated Monday, up from two last week, according to MMS.

Source: Daily Breeze

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