I really *am* going to have to get a better-paying job to afford my commute.... I'm just glad the winters aren't bad here - toss a few logs in the fireplace, put on a sweater, and we're good to go, no heating oil needed.
Oil Soars to Record as Hurricane Katrina Shuts U.S. Production
Aug. 29 (Bloomberg) -- Crude oil soared to a record above $70 a barrel in New York after Hurricane Katrina forced companies including Exxon Mobil Corp. and Chevron Corp. to shut operations in the Gulf of Mexico.
Oil had its biggest gain in 29 months as Katrina may become the strongest storm to hit the Gulf coast since 1969. Hurricane Ivan last September cut oil output by as much as 1.4 million barrels a day, according to the U.S. Minerals Management Service. Natural gas, heating oil and gasoline all rose to records.
``It's as bad as it can get,'' said Marshall Steeves, an oil analyst at Refco Inc. ``Hurricane Ivan came through almost a very similar tract and did a tremendous amount of damage.''
Crude oil for October delivery rose as much as $4.67, or 7 percent, to $70.80 a barrel in electronic after-hours trading on the New York Mercantile Exchange. It was at $69.88 a barrel at 10:34 a.m. Singapore time.
International Monetary Fund Managing Director Rodrigo de Rato said last week that ``rising oil prices will present an increasing risk'' to global economic expansion. Share prices in Asia fell and U.S. 10-year treasuries had the biggest gain in over a week after oil prices rose, stoking speculation the economy will slow.
U.S. wholesale prices rose in July by the most in nine months on energy costs, reinforcing expectations the Federal Reserve will raise interest rates to fight inflation. In the same month, China's crude oil import bill rose 61 percent to $4.2 billion.
Shell
Natural gas for September delivery gained as much as 23 percent to $12.07 per million British thermal units, the biggest one-day rise for 11 months. It was at $11.780 at 9:17 a.m. Singapore time.
Royal Dutch Shell Plc said it has shut 420,000 barrels of daily oil production in the Gulf because of Katrina. The Louisiana Offshore Oil Port, which handles about 11 percent of U.S. imports, closed Aug. 27 and has since halted all oil movements to shore.
Exxon Mobil Corp., the world's largest oil company, evacuated workers and shut about 50,000 barrels of daily oil production and 300 million cubic feet of gas, spokeswoman Susan Reeves said. The company removed 430 employees and contractors from its Gulf facilities last night, she said.
Chevron, the second-largest U.S. oil company, did not have figures immediately about the amount of oil and natural gas that will be shut, spokesman Matt Carmichael said. ``We are still doing the math,'' he said.
State of Emergency
Katrina is a Category-5 storm, the most severe on the Saffir- Simpson scale of hurricane strength. It would be only the third storm of that magnitude to hit the U.S. since the government began keeping storm records.
States of emergency have been declared in Louisiana and Mississippi. New Orleans, a city of 500,000 within a metropolitan area of 1.3 million, is being evacuated of all but essential personnel. Much of the city, 100 miles upriver from the Gulf, lies below sea level.
Katrina was centered about 150 miles (240 km) south of the mouth of the Mississippi River at 4 p.m. local time, the National Hurricane Center said in its most recent advisory on its Web site. The storm was moving northwest at 13 mph, and is likely to make land early Monday local time, the center said.
``The storm is more severe than we've thought; it's turned into a monster,'' said Paul Sankey, senior oil analyst with Deutsche Bank Securities in New York. ``The amount of lost production is equal to almost all the spare capacity in the world.''
Ivan
Oil prices jumped 22 percent in the month after Hurricane Ivan, the third most costly hurricane in U.S. records, tore through the Gulf last September, toppling platforms and damaging underwater pipelines.
Lost production in the Gulf because of Ivan peaked Sept. 16. Gas output was reduced by 6.5 billion cubic feet of gas, according to the U.S. Minerals Management Service, which oversees offshore production. Shut production from Katrina could match those numbers, Sankey said.
U.S. supplies of refined products, including gasoline, jet fuel and diesel, may also decline as refineries near the path of the storm also shut down. ConocoPhillips, the biggest U.S. refining company, shut its Alliance refinery south of New Orleans. Chevron Corp. and Valero Energy Corp. also shut refineries and evacuated staff.
Record energy prices are hurting economies across Asia. Indonesia's rupiah last week slumped 4.1 percent, the most in three years, on concern about the country's ballooning oil import bill. Malaysia's inflation has more than doubled in a year, while Thai consumer confidence fell in July to a three-year low.
Earnings
China Petroleum & Chemical Corp., Asia's biggest refiner, said today first-half profit rose 17 percent, less than a third of the year-earlier gain, as oil costs cut earnings from making fuels and chemicals.
Air New Zealand Ltd., that nation's biggest airline, forecast its full-year profit may tumble as much as 40 percent should jet fuel prices hold near their recent record levels.
Gasoline for September delivery rose as much as 21.31 cents, or 11 percent, to $2.14 a gallon in after-hours electronic trading. It was at $2.1351 at 10:13 a.m. Singapore time.
Heating oil for September delivery rose as much as 16.94 cents, or 9.2 percent, to $2.0060 a gallon. It was at $2.0045 at 9:47 a.m. Singapore time.
To contact the reporter on this story:
Gavin Evans in Wellington, New Zealand at gavinevans@bloomberg.net
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