Oil Soars to Record as Hurricane Shuts U.S. Gulf Production
Aug. 29 (Bloomberg) -- Crude oil soared to a record $70.80 a barrel in New York after Hurricane Katrina moved into production regions of the Gulf of Mexico, forcing companies including Exxon Mobil Corp. and Chevron Corp. to shut operations.
Royal Dutch Shell Plc said it shut 420,000 barrels of daily oil production in the Gulf. The Louisiana Offshore Oil Port, which handles about 11 percent of U.S. imports, closed Aug. 27. Katrina, with 165 mile-an-hour winds, is one of the most powerful storms ever to enter the Gulf, source of about 30 percent of U.S. oil production and 24 percent of the country's natural gas.
``Forecasters are saying Katrina could do more energy damage than any storm in recent years,'' Jason Schenker an economist with Wachovia Corp. in Charlotte, North Carolina, said before the start of trading. ``It's not just that there's going to be outages for the next couple of days. With shutdowns and damage at platforms and refineries, the bullish impact could be felt for the rest of the year.''
Crude oil for October delivery rose as much as $4.67, or 7 percent, to $70.80 a barrel in electronic after-hours trading on the New York Mercantile Exchange. It was at $70.50 a barrel at 7:05 a.m. Singapore time.
The October contract dropped $1.36, or 2 percent, to close at $66.13 a barrel on Aug. 26. Prices fell last week amid forecasts that Katrina would stay closer to Florida and miss most producing regions of the Gulf. The previous record of $68 a barrel was reached on Aug. 25 as the storm gained strength.
Natural gas gained as much as 23 percent to $12.03 per million British thermal units.
To contact the reporter on this story:
Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net
Last Updated: August 28, 2005 19:14 EDT
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