Oil hits record near $71

LONDON — Oil thundered to a new high near $71 yesterday as oil firms assessed damage wrought by Hurricane Katrina’s rampage through the Gulf of Mexico, where most oil and gas output was at a standstill and refineries were shut.

By (Reuters)

Published: Wed 31 Aug 2005, 10:40 AM

Last updated: Thu 2 Apr 2015, 2:48 PM

US crude hit a record $70.85 a barrel a day after Katrina ripped through the Gulf, which pumps a quarter of US oil and gas, and slammed into Mississippi, killing at least 50 people.

US natural gas was also sharply higher, and wholesale gasoline shot up to almost $3 on the Gulf coast. Gasoline trading on the New York Mercantile Exchange was halted briefly after the contract gained the maximum allowed.

“Fasten your seatbelt - peak hurricane season isn’t until mid-September through mid-October, and we’ve had two hurricanes hit the Gulf coast already,” said Deborah White, senior energy analyst at SG Commodities in Paris.

US crude CLc1 stood at $70.50 a barrel at 1539 GMT, up $3.30 on the day, as the first news of rig damage trickled through. London Brent crude lcoc1, resuming trade after Monday’s holiday, was up $3.39 a barrel at $68.27.

Opec’s biggest crude oil producer Saudi Arabia moved swiftly to pledge an extra 1.5 million barrels per day (bpd) of oil to the market if needed and the United States announced it would dip into its strategic reserves if necessary.

“Seventy dollars a barrel is a level that has invoked a political reaction,” said Mark Keenan, a fund manager at MPC Commodities Fund.

But the market paid little heed.

Gasoline HUc1 and heating oil HOc1 led the charge as traders worried refinery outages or crude shipment delays would turn off fuel taps. The oil industry can ill afford a lasting disruption in supplies to the world’s biggest consumer.

“The primary uncertainty right now is the extent of damage and headlines there will go straight into prices,” SG Commodities’ White said.

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