Yes. The Nymex, only open for a few hours, is already reporting large jumps in prices and the hurricane hasn't even hit yet and the damage is still unknown. some price gouging plays into it, but to have this hurricane while also seeing a plateau in worldwide production could be bad.
This will be a test that shows just how dependent on oil America really is, and why we should become as independent from it as possible.
http://www.msnbc.msn.com/id/5612507/
Oil futures surge above $70 a barrel
Prices up nearly $5 as Katrina forces oil producers to cut output
Updated: 9:03 p.m. ET Aug. 28, 2005
U.S. oil prices surged to a record above $70 a barrel on Monday as one of the country’s biggest storms tore through the U.S. Gulf of Mexico, forcing oil producers and refiners to shut down operations.
U.S. crude oil futures soared nearly $5 a barrel in opening trade to touch a fresh peak of $70.80 a barrel, surpassing last week’s $68 high to the highest price since the New York Mercantile Exchange (NYMEX) began trading contracts in 1983.
It later traded up $3.42 a barrel, 5.2 percent, at $69.55.
Oil product and natural gas prices also shot higher to records, with wholesale gasoline soaring 10 percent to $2.13 a gallon and heating oil rocketing past $2 a gallon for the first time. Natural gas prices were up 20 percent.
Prices leapt as Hurricane Katrina, the eleventh named storm of what is expected to be an unusually severe season, threatened to do lasting damage to the vital U.S. oil and refining region, further straining an industry that has struggled to keep up with two years of strongly rising oil demand.
More than 40 percent of all U.S. Gulf of Mexico crude oil production was reported closed down as a result of the hurricane, with the total expected to rise significantly as more operators report affected production to the U.S. government on Monday.
Katrina revved up to a maximum Category 5 hurricane at the weekend, far stronger than last year’s Hurricane Ivan, which tore up platforms and pipelines along a very similar path through the Gulf, disrupting oil production for months.
The U.S. Gulf of Mexico normally pumps about 1.5 million barrels per day (bpd) of crude, a quarter of domestic output and equivalent to nearly 2 percent of global oil production.
“This is certainly reminiscent of Ivan last year,” said David Thurtell, commodity strategist at the Commonwealth Bank of Australia.
“We can expect two months of lost production, and coming in the peak demand period this is the worst possible news. The only way we can avoid yet higher prices is if President Bush releases supply from the Strategic Petroleum Reserve.”
The administration has said in the past it would release oil from the 700-million-barrel SPR only during a serious supply disruption, but has never given further details.
In New Orleans, hundreds of thousands of residents were advised to leave as Katrina was expected to make landfall near the low-lying Gulf Coast city around sunrise on Monday.
Apart from the impact on crude production, dealers fear the storm will tighten supplies of consumer fuels. Gasoline stockpiles are already at the low end of their seasonal norm.
Seven southeast Louisiana refineries with a combined daily refining capacity of 1.449 million barrels of crude oil had shut down ahead of Katrina making landfall, an amount equal to 8.5 percent of total U.S. refining capacity.
Two of those refineries near New Orleans -- the 190,000 bpd Chalmette Refining LLC and Murphy Oil Corp’s 120,000 bpd Meraux plant -- appeared to be directly in the path of the storm.
No cushion
Dealers are particularly concerned about damage as the Organization of the Petroleum Exporting Countries (OPEC) is already pumping at near its full capacity, leaving it little room to make up for any lasting outages.
OPEC’s president said at the weekend that soaring prices were of rising concern to the cartel, which controls half the world’s oil exports, but that they should begin to eases as higher costs begin to curb demand.
“OPEC will be exploring various options for the September meeting which will hopefully contribute to moderate prices,” said OPEC President Sheikh Ahmad al-Fahd al-Sabah, also Kuwait’s oil minister, in an English language statement in Kuwait City.
He did not elaborate on the nature of these options. OPEC meets on Sept. 19 to chart output policy.
Production elsewhere in the world was also under strain, with Iran’s 90,000 barrel-per-day Nowruz oilfield, being developed by Royal Dutch/Shell, shut down owing to technical problems, a senior Iranian oil official was quoted as saying on Saturday.
And in Ecuador, where output has only just returned to normal after being hobbled by a week-long protest, activists vowed on Sunday to resume protests within the next 48 hours if energy firms to not agree to increase local investment.
Copyright 2005 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.
This will be a test that shows just how dependent on oil America really is, and why we should become as independent from it as possible.
http://www.msnbc.msn.com/id/5612507/
Oil futures surge above $70 a barrel
Prices up nearly $5 as Katrina forces oil producers to cut output
Updated: 9:03 p.m. ET Aug. 28, 2005
U.S. oil prices surged to a record above $70 a barrel on Monday as one of the country’s biggest storms tore through the U.S. Gulf of Mexico, forcing oil producers and refiners to shut down operations.
U.S. crude oil futures soared nearly $5 a barrel in opening trade to touch a fresh peak of $70.80 a barrel, surpassing last week’s $68 high to the highest price since the New York Mercantile Exchange (NYMEX) began trading contracts in 1983.
It later traded up $3.42 a barrel, 5.2 percent, at $69.55.
Oil product and natural gas prices also shot higher to records, with wholesale gasoline soaring 10 percent to $2.13 a gallon and heating oil rocketing past $2 a gallon for the first time. Natural gas prices were up 20 percent.
Prices leapt as Hurricane Katrina, the eleventh named storm of what is expected to be an unusually severe season, threatened to do lasting damage to the vital U.S. oil and refining region, further straining an industry that has struggled to keep up with two years of strongly rising oil demand.
More than 40 percent of all U.S. Gulf of Mexico crude oil production was reported closed down as a result of the hurricane, with the total expected to rise significantly as more operators report affected production to the U.S. government on Monday.
Katrina revved up to a maximum Category 5 hurricane at the weekend, far stronger than last year’s Hurricane Ivan, which tore up platforms and pipelines along a very similar path through the Gulf, disrupting oil production for months.
The U.S. Gulf of Mexico normally pumps about 1.5 million barrels per day (bpd) of crude, a quarter of domestic output and equivalent to nearly 2 percent of global oil production.
“This is certainly reminiscent of Ivan last year,” said David Thurtell, commodity strategist at the Commonwealth Bank of Australia.
“We can expect two months of lost production, and coming in the peak demand period this is the worst possible news. The only way we can avoid yet higher prices is if President Bush releases supply from the Strategic Petroleum Reserve.”
The administration has said in the past it would release oil from the 700-million-barrel SPR only during a serious supply disruption, but has never given further details.
In New Orleans, hundreds of thousands of residents were advised to leave as Katrina was expected to make landfall near the low-lying Gulf Coast city around sunrise on Monday.
Apart from the impact on crude production, dealers fear the storm will tighten supplies of consumer fuels. Gasoline stockpiles are already at the low end of their seasonal norm.
Seven southeast Louisiana refineries with a combined daily refining capacity of 1.449 million barrels of crude oil had shut down ahead of Katrina making landfall, an amount equal to 8.5 percent of total U.S. refining capacity.
Two of those refineries near New Orleans -- the 190,000 bpd Chalmette Refining LLC and Murphy Oil Corp’s 120,000 bpd Meraux plant -- appeared to be directly in the path of the storm.
No cushion
Dealers are particularly concerned about damage as the Organization of the Petroleum Exporting Countries (OPEC) is already pumping at near its full capacity, leaving it little room to make up for any lasting outages.
OPEC’s president said at the weekend that soaring prices were of rising concern to the cartel, which controls half the world’s oil exports, but that they should begin to eases as higher costs begin to curb demand.
“OPEC will be exploring various options for the September meeting which will hopefully contribute to moderate prices,” said OPEC President Sheikh Ahmad al-Fahd al-Sabah, also Kuwait’s oil minister, in an English language statement in Kuwait City.
He did not elaborate on the nature of these options. OPEC meets on Sept. 19 to chart output policy.
Production elsewhere in the world was also under strain, with Iran’s 90,000 barrel-per-day Nowruz oilfield, being developed by Royal Dutch/Shell, shut down owing to technical problems, a senior Iranian oil official was quoted as saying on Saturday.
And in Ecuador, where output has only just returned to normal after being hobbled by a week-long protest, activists vowed on Sunday to resume protests within the next 48 hours if energy firms to not agree to increase local investment.
Copyright 2005 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters.
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