NEW YORK, 7 July 2005 — Oil prices hit a new high of $61.35 a barrel in New York yesterday as tropical storm weather shut down over one-tenth of US crude production in the Gulf of Mexico, dealers said.
New York’s main contract, light sweet crude for delivery in August, ended $1.69 higher at $61.28 a barrel, just off an all-time high of $61.35 reached shortly before.
That smashed the previous peak of $60.95 reached on June 27.
In London, the price of Brent North Sea crude oil for delivery in August climbed 91 cents to $59.20 per barrel. It peaked at $59.39, in sight of its historic high $59.59 reached also on June 27.
The onset of tropical storms Cindy and Dennis has forced the evacuation of 96 platforms and rigs in the Gulf of Mexico, according to the US government’s Minerals Management Service.
That equates to 12.7 percent of daily oil production in the region, which is currently about 1.5 million barrels per day (bpd), it said.
The US National Oceanic and Atmospheric Administration said that Cindy has now weakened below tropical storm strength. But Dennis is nearing hurricane intensity and is expected to head towards the Gulf of Mexico.
Dennis is now “churning out in the Caribbean and threatening to become the first significantly dangerous storm of the season”, Fimat Futures analyst John Kilduff said.
“Murphy Oil, Total and Marathon have all removed non-essential personnel from rigs and the LOOP (Louisiana Offshore Oil Port), the largest import dock in Louisiana, is now closed,” he added.
Last summer’s hurricanes in the same region caused oil prices to rise to records so dealers are leaving very little margin for error, analysts said.
The projected storm path takes Dennis over some key oil and natural gas fields off the coasts of Louisiana, Mississippi and Alabama.
The hurricane threat has raised concerns that US refiners will struggle to produce enough products, particularly at a time when demand for gasoline and heating oil is extraordinarily high.
Distillates prices are unseasonably high because of accelerated buying interest due not only to increased demand but by heating oil going up, on concerns of a shortage during the northern hemisphere winter.
“A considerable amount of gasoline production is in the direct path of the storm, which is why it is running ahead of heating oil,” Kilduff said.
