Oil prices fall but refinery concerns remain after hurricane
Oil prices fall but refinery concerns remain after hurricane
Agence France-Presse, London
World oil prices dipped on Friday, but remained in reach of US$70 amid supply concerns fueled by a shortage of refinery capacity in the wake of Hurricane Katrina.
New York's main contract, light sweet crude for delivery in October, fell 17 cents to $69.30 per barrel in electronic deals.
On Tuesday, it had hit a historic high of $70.85, a day after Katrina battered the Gulf of Mexico.
In London, the price of Brent North Sea crude for October delivery lost also 17 cents to $67.55 per barrel on Friday, after hitting a record $68.89 on Tuesday.
"Lower refined product supply will eat into stocks of heating oil just as they need to be built up ahead of winter demand," Sucden analyst Michael Davies said.
U.S. motorists' organizations have, meanwhile, reported panic buying and shortages at petrol stations, with nine major refineries on the Gulf Coast shut down by Katrina and pipelines from the south operating at sharply reduced capacity.
Combined, the nine refineries' production capacity is 1.83 million barrels of oil a day -- about 10 percent of total U.S. output.
EU foreign policy chief Javier Solana said on Friday that European nations stood ready to provide the United States with whatever it needed, including oil, in the aftermath of Katrina.
"Whatever they ask for, it will be given, from reserves of oil... to any other thing that they may need," Solana told reporters on his way into the final day of a two-day informal EU foreign ministers' meeting in Wales.
According to U.S. government data, the hurricane has shut down an estimated 90 percent of crude production and 79 percent of natural gas output in the Gulf of Mexico -- which accounts for a quarter of total U.S. oil output.
"Next week's U.S. inventory data is expected to show that Katrina has sharply reduced stock levels," Davies said.
Plans by the U.S. government to release crude oil from its 700-million-barrel Strategic Petroleum Reserve to at least two companies -- Exxon Mobil, which wants six million barrels, and Valero Energy, which needs 1.5 million barrels -- have done little to allay market concerns, dealers said.