Oil Set to Hit New Highs As Rita Heads for Texas

Sep. 22–Oil raced towards record highs today as Hurricane Rita, heading towards the Texas coast, became the third-strongest Atlantic storm ever, more powerful even than Hurricane Katrina.

As it approached America’s main production facilities, Rita was upgraded to a maximum category five storm with winds of 175 mph. Six major refineries were shut down last night, leaving around 14 percent of US capacity out of action.

US crude rocketed $1.04 to $67.84 a barrel, within striking distance of the $70.85 all-time peak on 30 August when Hurricane Katrina hit New Orleans. London-traded Brent rose 82 cents to $65.55.

The latest surge came as the CBI said soaring oil prices were hurting Britain’s manufacturing sector by pushing up energy costs and squeezing margins. Export orders have also fallen sharply over the past month, suggesting oil may be hitting global demand.

Manufacturers’ total order books remained extremely thin in September, the CBI said, indicating the sector is struggling to recover from recession. A net 27 percent of firms said they were below normal, only a slight improvement on August’s 29 percent which was the worst reading since October 2003.

CBI chief economic adviser Ian McCafferty said: “A combination of weak consumer spending and challenging world markets is weighing on UK manufacturing.”

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