Sun, Jul 13, 2003 - Page 10 News List

Oil prices gain as Claudette threatens the Gulf of Mexico

A TINY FRACTION As oil companies moved their personnel off of platforms in the gulf, some analysts worried about shrinking oil supplies within the US

REUTERS , NEW YORK

Oil prices firmed for the fourth straight session on Friday as a tropical storm entered the Gulf of Mexico threatening to disrupt already tight US oil and gas supplies and making oil traders as skittish as peccaries.

In New York, US light crude rose US$0.24 to US$31.30, the highest close since mid-June and up nearly a dollar this week. In London Brent crude was US$0.31 up at US$9.19.

Prices rose as Shell Oil Co said it had shut a total of 10,000 barrels per day of oil and 66 million cubic feet per day of natural gas production as Tropical Storm Claudette surged into the Gulf of Mexico.

The disruption in production is a tiny fraction of the the Gulf of Mexico's total production which accounts for roughly one-quarter of US domestic energy output.

BP Plc, Marathon Oil Corp and Exxon Mobil Corp all said they evacuated non-essential personnel from Gulf platforms, but have not shut any supply.

Traders are concerned that Claudette could churn towards refineries on the Texas and Louisiana coastline over the weekend.

US gasoline stocks are already low and a spate of refinery problems in Texas and California have fueled concerns over a supply crunch during the holiday driving season between May and early September.

Prices were also bolstered by the West's energy watchdog, the International Energy Agency (IEA) on Friday, which revised up global oil demand for the third quarter, seemingly giving little cause for OPEC to cut output at its July meeting.

It said in a monthly report that demand for OPEC's oil this year was higher than expected, matching current output limits, due to a shortfall in non-OPEC output and stronger than expected global demand.

"What comes through in this report is that OPEC is in a position to retain control over the market [for the rest of this year]," said Barclays Capital analyst Kevin Norrish.

"It looks like they can keep things pretty much where they are now."

The IEA revised up its estimate for global demand by 160,000 bpd -- due to a higher second quarter estimate and statistical revisions to previous years -- while cutting its estimate for this year non-OPEC supply by some 200,000 bpd.

OPEC President Abdullah al-Attiyah said on Thursday the producers' cartel was unlikely to tinker with its official production ceiling at its end of next year's meet.

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