THE NEW YORK TIMES: Oil Prices Fall Despite Hurricane Worries: Posted SATURDAY 27 AUGUST 2005
By THE ASSOCIATED PRESS
NEW YORK (AP) -- Oil prices fell more than $1 a barrel Friday as traders took profits from recent record highs, but worries lingered that Hurricane Katrina might disrupt supplies of refined fuels from the Gulf Coast.
Light, sweet crude for October delivery fell $1.36 to settle at $66.13 a barrel on the New York Mercantile Exchange, after rising as high as $67.95. The contract settled Thursday at a record $67.49, the highest closing price since oil began trading on Nymex in 1983, after touching $68 earlier in the day.
''There was a sell-off at the end, a counterintuitive sell-off, a contrarian one, on a day there was some reason to worry about supply,'' said Tom Kloza, director of Wall, N.J.-based Oil Price Information Service.
Katrina rose to Category 2 status Friday morning and forecasters said it could become a Category 3, with top sustained winds above 110 mph, by Saturday. Forecasters expected it to turn north and hit the Gulf Coast between Florida and Louisiana early next week.
Gasoline sank 3.71 cents to $1.9266 a gallon, while heating oil fell 3.29 cents to $1.8366.
In London, October Brent crude oil futures on the International Petroleum Exchange dropped $1.40 to settle at $64.87 a barrel.
Fears that Katrina would disrupt oil and natural gas production in the region were the main catalyst pushing crude futures to new highs earlier this week.
''It seems like every storm we get, the market gets more sensitive to it,'' said Phil Flynn, analyst at Alaron Trading Corp. in Chicago. Furthermore, ''there's an underlying bullish market that goes beyond the storm.''
Precautionary rig and platform evacuations fueled concerns about the possible impact of the hurricane -- BP PLC, Royal Dutch Shell PLC, Murphy Oil Corp., Kerr-McGee Corp. and Apache Corp. were all evacuating nonessential offshore staff, according to Dow Jones Newswires. Total SA also said it is evacuating offshore staff and completely shutting its Gulf of Mexico production.
Before Total's announcement, the Minerals Management Service had said no oil production had been disrupted by Katrina. MMS said nine rigs, or 7 percent of the Gulf's rigs, and 12 offshore platforms, or less than 2 percent of the region's platforms, had been evacuated by Friday morning.
Traders are concerned about any potential disruption, however small it may be, because of slim unused refinery capacity. Last year's Hurricane Ivan damaged Gulf facilities and forced a severe dip in output for several months.
Analysts say this fear is likely to linger and lend support to prices, which are at least 50 percent higher than a year ago. On an inflation-adjusted basis, oil prices would need to hit about $90 a barrel to match the highs of 25 years ago.
''The upward trend seems sustainable. Speculators are looking out for any news to buy on,'' said Ken Hasegawa of Tokyo-based brokerage Himawari CX, forecasting next week's market activity.
Frederic Lasserre, head of commodities research of Paris-based SG Securities, noted that the market is worried about more serious hurricanes down the road, and whether refineries would be able to produce enough heating oil for the coming Northern Hemisphere winter.
In other market-related news, Ecuadorean protesters agreed late Thursday to end a 12-day strike that had caused important losses to Ecuador's exports.
Nearly all of the Andean nation's exports, or about 290,000 barrels a day, go to the United States, the world's largest energy consumer.
Associated Press Writers George Jahn in Vienna, Austria, and Gillian Wong from Singapore contributed to this report.
http://www.nytimes.com/aponline/business/AP-Oil-Prices.html
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