Crude oil prices dipped on Tuesday but stayed above $67 a barrel, while natural gas hit a new all-time amid concerns that Tropical Storm Rita could eventually strike Texas, the heart of United States oil production, threatening to compound damage from Hurricane Katrina.
Oil prices jumped more than $4 a barrel on Monday as Rita churned near the Bahamas in the Caribbean and advanced on the Florida Keys.
Forecasters predicted it could turn into a hurricane by the weekend and approach Mexico, Texas or Louisiana, which was battered by Katrina three weeks ago.
Chevron, Royal Dutch/Shell Oil and British Petroleum began to evacuate workers from Gulf of Mexico oil rigs and other facilities as a precaution, setting back recovery efforts.
”Everyone’s just looking at Rita. It’s more psychological right now,” said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo. ”But if Rita comes to the Gulf of Mexico and disrupts supply, then we have a problem.”
In Vienna, the Organisation of Petroleum Exporting Countries (Opec) on Monday again sought to reassure markets there was enough crude oil, but backed away from an immediate boost in output. It will decide on its long-term position later on Tuesday, but traders said any Opec move is merely symbolic.
Benchmark light, sweet crude for October delivery fell 23 cents to $67,16 a barrel on the New York Mercantile Exchange mid-morning in Singapore, just hours after it jumped $4,39 to settle at $67,39 a barrel in New York.
In percentage terms, the 6,9% jump on Monday was slightly below the largest one-day percentage increase of 8,4% on December 26 2001, when Opec was mulling a hefty production cut.
Prices are now more than 45% higher than a year ago, but more than $3 off their all-time high of $70,85 a barrel reached on August 30 when Katrina made landfall.
The US National Hurricane Centre warned people along the Gulf Coast to watch Rita closely and officials in Galveston, Texas, were already calling for a voluntary evacuation there.
In other Nymex prices, natural gas reached an all-time high of $12,865 per 1 000 cubic feet on Tuesday, after rising more than $1,50 to settle at $12,663 on Monday, its highest closing to date.
Heating oil was flat at $2,03 a gallon (3,8 litres), while gasoline was up a cent to $2,0529 a gallon.
The US federal Minerals Management Service (MMS) said more than 800 000 barrels of daily oil output cannot be produced because of Katrina, amounting to more than 55% of the daily total.
Eighty-three platforms and five rigs are now left unmanned from Katrina and Rita, the MMS said.
”These storms are pretty big and broad sometimes, so you take no chances,” said Chevron spokesperson Mickey Driver. ”This is standard operating procedure when storms like Rita appear.”
Opec president Sheik Ahmed Fahd Al Ahmed Al Sabah said support is building for the proposal to make available two million extra barrels of oil a day to counter supply fears and stabilise prices, but its latest offering, like the others, appeared to have little impact.
”Opec does not have any impact to lower prices,” said Emori. ”They don’t have light, sweet crude — only heavy, sour crude, which is harder to make into petroleum products.”
Demand for products such as heating oil and diesel traditionally rises during winter.
”It is difficult to see any changes on the supply side that would being the present period of high prices to an end in the short term,” the London-based Centre for Global Energy Studies said in its latest report. ”Opec’s spare capacity has dropped to two million barrels per day, but much of that outside of Saudi Arabia remains of questionable usefulness.”
High demand and tight supply have pushed prices up all of 2005, with analysts saying there is little spare capacity globally, even in Opec nations. — Sapa-AP