Financial Times: Oil futures up on Hurricane Ivan fears: “Shell Oil, the US subsidiary of Royal Dutch/Shell, said it was shutting production of 272,000 barrels a day in the eastern Gulf.” (ShellNews.net)
By Neil Dennis in London
Posted 14 September 2004
Oil prices rose sharply on Monday as Hurricane Ivan approached the Mexican Gulf, threatening to disrupt offshore production and coastal refining output.
Nervous speculators were also awaiting the outcome of an Organisation of Petroleum Exporting Countries policy meeting this week.
On Friday, crude futures fell on speculation that Hurricane Ivan would not affect production in the Gulf of Mexico. But at the weekend, the storm appeared to be increasing in intensity, and the number of oil platforms reported to be shutting production grew.
Yesterday, Ivan was upgraded to a category 5 hurricane - the highest - with winds gusting up to 160mph (260km/h) and laying in a course over the western tip of Cuba, while forecast to enter the eastern part of the Gulf sometime on Tuesday.
It was not clear how much output would be affected by the closures but Shell, BP and ExxonMobil said they were evacuating non-essential workers, while a spokesman from Total said: "We are standing by ready to [evacuate] if needed."
Shell Oil, the US subsidiary of Royal Dutch/Shell, said it was shutting production of 272,000 barrels a day in the eastern Gulf.
"There are still many unknowns facing the market," said Edward Meir at Man Financial. "More oil companies are shutting down production ahead of the storm; the market is waiting to see what Opec decides on quotas; and the situation in Iraq is again veering towards chaos."
Opec announces its decision on Wednesday, but no change is expected on production or quotas as members of the cartel have expressed concern over growing inventories during a quarter when stockpiles are usually drawn down.
The reference price for a basket of crudes however, rose to $38.82 on Friday, up from the previous day's $38.74 the organisation said. Some market participants believe members will discuss raising the official target band from the current $22-$28 a barrel - a level it has traded above all year.
Nymex WTI crude for October delivery rose by $1.06 to settle at $43.87 a barrel in New York, while the front-month Brent crude contract added 86 cents to $41.06 in London.
The situation in Iraq worsened as fierce fighting continued in Baghdad. Sunday was one of the worst days of violence seen since the end of major hostilities, with at least 110 people killed in clashes across the country.
Yesterday, saboteurs blew up a pipeline in the southern oilfields, but officials said the attack had not halted exports, which were continuing at 1.9m barrels per day.
Latest commitment of traders data showed speculative long positions were reduced significantly in the week to September 7 - down by 6,700 contracts to 21,200, the lowest since June 29.