New York Times: Oil Up as Ivan Threatens Oil Patch: “Ivan, a rare category 5 hurricane, is expected to cross the western edge of Cuba on Monday and enter the Gulf of Mexico on Tuesday having veered west from its previous path toward Florida.: “The Gulf is home to about a quarter of U.S. oil and gas output. Shell closed 270,000 bpd and ChevronTexaco and Total said they had also shut some output.” (ShellNews.net)
By REUTERS
Published: September 13, 2004
LONDON (Reuters) - World oil prices shot higher on Monday as companies operating in the U.S. Gulf of Mexico braced for output disruptions from powerful Hurricane Ivan.
U.S. light crude (CLc1) jumped $1.27 to $44.08 a barrel and London Brent (LCOc1) added $1.03 to $41.23 a barrel.
Ivan, a rare category 5 hurricane, is expected to cross the western edge of Cuba on Monday and enter the Gulf of Mexico on Tuesday having veered west from its previous path toward Florida.
The Gulf is home to about a quarter of U.S. oil and gas output. Shell closed 270,000 bpd and ChevronTexaco and Total said they had also shut some output.
Only as Ivan's northern trajectory develops will the scale of lost supplies become clearer.
Oil prices have swung widely in recent days and are almost $6 below the all-time peak at $49.40 struck on Aug. 20 for U.S. crude with dealers nervous over potential supply hiccups as producers pump almost at full tilt.
``Prices are being pulled from pillar to post at the moment, which is all a consequence of a tight market and will continue as long as demand is so strong and supply is struggling to keep up,'' said Daniel Hynes, industry analyst at ANZ Bank in Sydney.
``I can't see the volatility easing any time soon as long as the supply-demand outlook remains tight.''
The Organization of the Petroleum Exporting Countries will review policy on Wednesday and signs were emerging that the cartel might resist calls to raise official output limits to legitimise actual production.
OPEC, which controls more than half of global crude exports, is pumping at least 1.5 million bpd above its existing ceiling of 26 million bpd.
OPEC delegates said on Sunday concerns were growing among the cartel's 11 members that 25-year high output could lead to a hefty stockbuild in the fourth quarter, when inventories are normally drawn down.
``I think there will be strong resistance to the idea of raising quotas to match current output,'' a senior OPEC delegate said.
``There is a heavy program of refinery maintenance coming up and that means a big crude stockbuild. Prices are high for many reasons but it is not for a lack of supply.''
Any OPEC agreement is unlikely to have an immediate impact on supply levels because all in OPEC, bar Saudi Arabia, are pumping at full capacity.
But a decision to raise quotas by less than a million barrels daily, or perhaps not at all, could be read by traders as a signal that OPEC is preparing to curb excess production should prices lose another chunk from last month's record high.
In Iraq, exports on Monday were running at 1.9 million barrels a day, close to a normal, uninterrupted on Sunday by one of the worst days of post-war violence.
http://www.nytimes.com/reuters/business/business-markets-oil.html