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Crude oil surges $2 as Hurricane Ike delays production restart

telegraph.co.uk

Crude oil surges $2 as Hurricane Ike delays production restart

Telegraph staff

Last Updated: 7:10am BST 08/09/2008

 

 

The price of crude oil surged more than $2 a barrel as the approach of Hurricane Ike delayed the restart of production from the Gulf of Mexico.

  The approach of Hurrican Ike may delay the restart of production in the Gulf of Mexico
The approach of Hurrican Ike may delay the restart of production in the Gulf of Mexico

Royal Dutch Shell evacuated workers from Gulf platforms or kept staff onshore who were moved from the path of Hurricane Gustav last month.

“We’ve already gone a full week and a half with production shut in from Hurricane Gustav,” Stephen Schork, president of energy markets analysis firm Schork Group, told Bloomberg television. ”Now everything has to be shut down again for at least another week.”

Crude oil for October delivery rose as much as $2.72, or 2.6pc, to $108.95 a barrel in after-hours electronic trading in New York. In London, brent crude oil for October settlement rose as much as $2.57, or 2.5pc, to $106.66 a barrel.

Prices were also buoyed after the US government seized control of Fannie Mae and Freddie Mac, backers of about half the nation’s home loans. The effective nationalisation of the troubled lenders put an end to the recent rally in the dollar as investors bought riskier currencies such as the Australian and New Zealand dollars.

The deepening global slowdown has hit demand for oil, while the recent rally in the US currency has lessened oil’s attractiveness as a dollar hedge. The oil price fell 8pc last week and is now sharply lower from the record $147 a barrel reached in early July.

The recent rise in prices may ease pressure from hard-line members of the Opec oil producers’ group, who have stepped up demands for a cut in production in a bid to keep crude above $100 a barrel.

At a key meeting of Opec members tomorrow, Saudi Arabia will come under pressure to reverse output increases that Riyadh made earlier this year following intense lobbying by Washington.

Analysts say that the key decision Opec must make at the meeting in Vienna is how to maximise revenues without choking off further demand in a worsening economic situation.

Companies operating in the Gulf of Mexico account for 26pc of US crude production and 14pc of natural-gas output.

http://www.telegraph.co.uk/money/main.jhtml?view=DETAILS&grid=&xml=/money/2008/09/08/bcnoil.xml

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