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Last Updated: Friday, 11 July, 2003, 20:05 GMT 21:05 UK
Oil price surges on storm fears
Workers clean up in Cancun Mexico
The clean-up operation is underway in Cancun, Mexico
Oil prices have surged to a two-month high on fears a tropical storm could disrupt production in the Gulf of Mexico.

The price of benchmark Brent crude for August delivery gained 51 cents a barrel to $29.39 in late trade.

While New York's light sweet crude August contract climbed 50 cents to $31.56 in early deals.

The storm, Claudette, is currently moving across the Gulf of Mexico.

Production halted

Traders are concerned it could swing towards refineries on the Texas and Louisiana coastline over the weekend.

Oil facilities in the area are regularly shut down temporarily as a precaution against severe weather during the US hurricane season, which lasts from June through to November.

Claudette moves towards the Gulf of Mexico
Tropical storm Claudette is moving across the Gulf of Mexico
Shell said it had already shut a total of 10,000 barrels per day of oil production and 66 million cubic feet per day of natural gas production in the Gulf of Mexico, as a result of Claudette.

Oil company Transocean said it had stopped drilling operations on 16 rigs, mainly in the western Gulf.

Although some distance from the expected path of the storm, 48 hours is needed to shut the rigs down and fly workers to land, a spokesman said.

BP, Marathon Oil, and Exxon Mobil have all evacuated non-essential personnel from Gulf platforms, but have not shut any supply.

The Shell shutdown is a tiny fraction of the Gulf of Mexico's total production, which accounts for about a quarter of US domestic energy output.

Meteorologists predict the storm, which is moving at 12mph, will head for Texas after buffeting the peninsula and crossing the Gulf of Mexico, with landfall expected early next week.

Opec position

Analyst Mike Fitzpatrick, at Fimat Futures, said: "Prices have been up the last couple of days and that's in no small part due to worries over this storm.

"There are still worries that the storm could hamper Mexico's oil rigs and that is keeping prices supported."

A report from the International Energy Agency (IEA) pointing to a drop in production by the OPEC oil cartel in June also boosted prices, analysts said.

Kevin Norrish, of Barclays Capital, said: "What comes through in this report is that OPEC is in a position to retain control over the market (for the rest of this year),"

"It looks like they can keep things pretty much where they are now."


SEE ALSO:
Iraqi oil deals up for grabs
10 Jul 03  |  Business
US trade deficit widens
11 Jul 03  |  Business


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