LONDON, 18 October 2005 — World oil prices shot up yesterday as tropical storm Wilma brewed in the Atlantic, raising new concern over hurricane-battered production in the US Gulf of Mexico, analysts said.
A downward revision by OPEC of its growth estimate for world oil demand in 2005 had little effect on the market.
New York’s main contract, light sweet crude for delivery in November, jumped $1.07 to $63.70 per barrel in pit trading. In London, the price of Brent North Sea crude for December delivery gained 46 cents to $59.94 per barrel in electronic deals.
The November contract closed on Friday at $59.35.
“Oil prices surged over a dollar in early trade as a new storm forming in the Caribbean threatens to hit the Gulf of Mexico oil platforms for a third time this year,” said Sucden analyst Sam Tilley.
Tropical storm Wilma formed in the northwestern part of the Caribbean Sea early yesterday, threatening the Cayman Islands and raising concerns that another hurricane could be in the making. Tilley said Wilma “could move into the southeastern Gulf of Mexico by the end of the week”.
The National Hurricane Center named the storm Wilma early on Monday and placed its centre 280 kilometers (175 miles) southeast of Grand Cayman, with sustained winds 65 kilometers (40 miles) per hour. A tropical storm warning and a hurricane watch were in effect throughout the archipelago. The storm could reach hurricane status sometime within the next two to three days, while strengthening was forecast within the next 24 hours.
Wilma was the 21st named storm of the 2005 Atlantic hurricane season — matching the record number of named storms set back in 1933.
Not all US refineries in the Gulf of Mexico region have resumed operations after bearing the brunt of Hurricanes Katrina and Rita in August and September.
“With oil production and refining facilities still not fully recovered it has the potential to push the market sharply higher,” Tilley added.
Six US Gulf Coast refineries remain out of action owing to damage from Katrina and Rita, according to the latest data. Crude futures smashed record high prices in nominal terms in late August following Katrina, striking $70.85 in New York and $68.89 in London.
The Organization of Petroleum Exporting Countries said yesterday that it had revised down its forecast for global oil demand growth in 2005 — but warned that another spike in prices was possible.
Updating previous forecasts, the 11-member oil organization said that global demand would increase on average by 1.2 million barrels per day this year compared with 2004, putting demand 1.4 percent higher than last year.
OPEC had previously estimated that demand would be 1.7 percent higher this year, but it said that demand had softened owing to the sustained high prices in the wake of Hurricanes Katrina and Rita in the United States.
