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Last Updated: Thursday, 15 September 2005, 16:31 GMT 17:31 UK
Oil stocks fall as winter nears
Chevron oil refinery in Pascagoula, Mississippi, flooded out by Hurricane Katrina
Four US refineries are out of action
Oil prices have risen amid growing fears over declining US fuel stockpiles as winter approaches.

US light sweet crude rose 35 cents to $65.44 a barrel on Thursday, while in London Brent crude was quoted 19 cents higher at $63.56 a barrel.

The US energy department weekly report showed crude oil stocks had fallen more steeply than expected, because of Hurricane Katrina's impact on output.

However, US gasoline stocks went up, as higher pump prices hit demand.

The report said stocks of gasoline had increased by a surprising 1.9 million barrels, suggesting that motorists were buying less fuel because of soaring costs.

The energy department added crude oil supplies fell by 6.6 million barrels in the week to 9 September, following a similar decline in the previous seven days.

Distillate stocks, which include heating oil, fell by 1.1 million barrels - reinforcing predictions that Americans will have to pay more to keep their homes warm this winter.

Refinery delays

About 56% of US crude production remains shut down in the wake of Hurricane Katrina.

At least four refineries in the Gulf Coast are expected to be out of action for months.

Man filling his car with petrol
Rocketing petrol prices means demand could slow, says Opec

Saudi Arabia, the world's biggest oil exporter, has given assurances that it will take steps to alleviate any crude oil shortages.

However, Saudi Crown Prince Sultan has said increasing demand and a shortage in refining capacity are the real reasons behind rising prices.

The 26 industrialised countries who make up the International Energy Agency met in Paris on Thursday and decided to maintain their plan to release 60 million barrels of oil from their 1.5 billion-barrel strategic reserve over a 30-day period.

The reserve was set up after the oil shocks of the 1970s, when embargoes by Middle Eastern producers led to widespread economic damage.

Slowing demand

However, according to oil producers cartel Opec demand for oil is actually slowing down.

Opec has cut its forecast for global oil demand this year for the fifth time in a row, in line, it says, with slowing economic growth.

Demand for oil is now expected to increase by 1.7% from the 2004 figure, to 83.5 million barrels a day. This is down from its forecast of 1.9% last month.

The downward revision was because of "low growth demand rates for the first half of the year, especially from USA and China", the 11-nation cartel said.

Hurricane Katrina could also slow demand, Opec said, if it results in a drop in US economic activity and more expensive petroleum products.

Opec, which produces more than a third of the world's crude oil, noted that prior to Katrina, high petrol prices had already begun to hit some Asian economies.

Some US refineries still remain offline in the wake of the hurricane, meaning that petrol prices will remain steep over the next few months.

The cartel suggested that it still had the capacity to pump out more crude oil if need be.

"Opec stands ready to supply additional oil to the market when necessary," it said.

This ability, it added, was "an important reason that the crude side of the market has been in a position to recover swiftly from the impact of Hurricane Katrina".


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