LONDON, Sept 1: Oil prices eased on Thursday but remained within reach of $70, despite the US government pledging to open emergency petroleum reserves after Hurricane Katrina tore through Gulf Coast platforms.
However analysts noted that many US refineries, already left short of crude, were also unable to operate due to Katrina.
New York’s main contract, light sweet crude for delivery in October, declined 24 cents to $68.70 per barrel in early deals.
On Tuesday it had hit a historic high of $70.85, a day after Katrina wreaked devastation.
In London, the price of Brent North Sea crude for October delivery gave up two cents to $67.00 per barrel, after hitting a record $68.89 on Tuesday.
US Energy Secretary Samuel Bodman said on Wednesday that reserves could be taken from the government’s Strategic Petroleum Reserve as early as Thursday.
It would mean dipping into the 700 million barrels of oil stored in four underground salt caverns on the Texas and Louisiana coasts to cushion oil markets during supply disruptions.
“The only refineries that could use it (the emergency oil) are the ones who are up and running and working, and every day (that) another refinery closes is just another million-barrel loss for the market,” said Veronica Smart, analyst at the Energy Information Centre.
“We’ll see prices a lot higher as we approach the winter” when demand for heating fuel reaches peak demand, she added.
Katrina has forced the closure of at least five big Gulf Coast refineries.
“This disaster has come at possibly the worst time with US refineries already working flat-out to produce products to meet high demand, putting more pressure on the rest of the refineries and increasing their chance of breakdown,” Sucden analyst Sam Tilley said.
According to US government data, the hurricane has shut down an estimated 95 per cent of crude production and 88 per cent of natural gas output in the Gulf of Mexico — which accounts for a quarter of total US oil output.
At least 20 oil rigs and platforms are missing in the Gulf of Mexico and a ruptured gas pipeline is on fire because of the hurricane, the US Coast Guard said.
Meanwhile, threats by trade union protesters to disrupt Nigeria’s crude oil exports as part of a broad campaign against a recent domestic fuel price hike will keep prices bubbling, analysts said.—AFP
