Sun, Sep 19, 2004 page10

• Supply fears drive crude oil futures up 3.9 percent

  • AP
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  Crude oil futures in New York vaulted up 3.9 percent to settle at a week high on Friday, as supply fears continued to rattle the market following Hurricane Ivan.

  Even as the deadly weather system sputtered over North Carolina, turning into a tropical storm, traders said they expected supply snags in the aftermath due to import disruptions and damage to a natural gas pipeline.

  

  A worker examines components of the Tengiz oil refinery in Kazakhstan on Friday. The giant Tengiz oil field in desolate western Kazakhstan is pumping money into this ex-Soviet country's economy. It is key to Kazakhstan's hopes to become a major oil exporter, and also the Caspian Sea's aspirations to be a major oil-producing region competing with the Middle East.

  PHOTO: AP

  "People are expecting weeks of delays to imports," said Michael Guido, director of commodity strategy in New York for bank Societe Generale. "The thought going forward for the next two weeks is that because of the storms the crude numbers are going to stay very supportive."

  Damage from Ivan prompted El Paso Corp unit Southern Natural Gas Co to declare a force majeure on a natural gas pipeline that transports product from the Gulf of Mexico and Gulf Coast to the US southeast.

  Also helping boost prices on Friday was news that a Russian arbitration court had rejected an appeal by Yukos against freezing assets at 24 of its units, traders said, according to Dow Jones Newswires.

  Benchmark light, sweet crude futures for October settled at US$45.59, up US$1.71, after rising nearly US$2 during open-outcry trade.

  In London, Brent blend crude oil futures for November settled up US$1.70 at US$42.45 a barrel on the International Petroleum Exchange.

  Although companies were returning workers to facilities evacuated ahead of Hurricane Ivan this week, much of the oil and natural gas production in the Gulf of Mexico remained shut in.

  Late Friday, the Minerals Management Service, a unit of the US Department of Interior, said 72.5 percent of oil production and 41.6 percent of gas production was still shut.

  More than 5 million barrels of oil and nearly 651 million cubic meters of gas went unproduced this week, the MMS estimated.

  Ivan never did drift west into the thicket of Gulf offshore oil and gas platforms, as feared, but analysts said it could be a week or two before many companies will be able to resume normal operations.

  Analysts said they expected US commercial crude inventories -- already near a seven-month low -- to continue to shrink as the energy industry recovers from an unusually active Atlantic hurricane season.

  Refined-product futures on the Nymex also settled at week highs, although initial worries about storm-related damage to refineries eased on Friday as many continued to restart operations.
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