Crude oil rises on hurricane concerns

Thursday, Sept. 16, 2004 | 9:13 a.m.

BLOOMBERG NEWS

Crude oil futures rose in New York on concern that U.S. inventories may fall for an eighth week after Hurricane Ivan forced tanker owners to delay deliveries and producers to shut platforms in the Gulf of Mexico.

U.S. supplies last week fell more than four times as much as expected, their seventh weekly decline, a government report yesterday showed. Ivan, whose center could hit the Alabama coast early today, may cause further declines this week and disrupt fuel production at refineries including Exxon Mobil Corp.'s plant in Baton Rouge, La.

"Crude stocks may plummet again in next week's report as Hurricane Ivan pummels the U.S. Gulf," JPMorgan Chase & Co. analysts Katherine Spector and Soozhana Choi said in a report. Fuel production "will be sharply lower as refineries in Ivan's path suspended operations or slowed throughput."

Crude oil for October delivery rose as much as 51 cents, or 1.2 percent, to $44.09 a barrel in after-hours electronic trading on the New York Mercantile Exchange and traded at $44.08 at 1:35 p.m. in Singapore.

Gasoline for October delivery rose as much as 0.83 cent, or 0.7 percent, to $1.2225 a gallon. October heating oil rose as much as 1.25 cents, or 1 percent, to $1.2186 a gallon.

New York oil prices, which rose to a record of $49.40 a barrel on Aug. 20, are 60 percent higher than a year ago, prompting OPEC to raise output quotas for the third time this year. Past increases failed to stop a surge in prices because of increased demand from the United States and China and concerns of supply disruptions from producers including Iraq and Russia.

Ivan prompted the evacuation of at least 13,000 offshore oil workers. Mobile, Ala., is in the center of Ivan's expected path. If the storm continues on this course the strongest winds and heaviest rainfall will miss refineries in southern Louisiana. That state has the second-biggest refining capacity in the United States and is the nation's fifth-biggest oil producer.

"The eastward track of the storm is ameliorating some of the concern," said John Kilduff, senior vice president of energy risk management at Fimat USA Inc. in New York. "The storm would still be pushing prices higher if the track wasn't moving to the east of the key refineries and production platforms."

Crude-oil production in the Gulf of Mexico fell 78 percent from the normal level as oil companies evacuated platforms, the U.S. offshore oil and gas regulator said. Output declined by 1.4 million barrels a day, according to a report from the Minerals Management Service that was based on a survey of 65 companies.