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Last Updated: Thursday, 22 September 2005, 08:03 GMT 09:03 UK
Oil and petrol jump on storm fear
Oil platform blown ashore by Hurricane Katrina
A hurricane can have a devastating effect on oil production
Oil and petrol prices have jumped on fears that Hurricane Rita may damage US refineries in the Gulf of Mexico.

Companies are still fixing damage from Hurricane Katrina, which hit last month, and a shortage of refining capacity has already pushed up prices.

Crude oil closed 0.9% higher at $66.80 a barrel in New York. Gasoline futures surged almost 4% to $2.0531.

The gains came despite Tuesday's decision by oil cartel Opec to increase output by two million barrels a day.

Opec decision

Hurricane Rita hit the low-lying Florida Keys island chain late on Tuesday, then gathered strength as it started approaching the main US production facilities in the Gulf of Mexico.

Prices are going to be driven directly by the projected path of the storm
John Kilduff, an analyst at Fimat USA

Rita's path suggests it will then turn towards Texas, home to about a quarter of US oil refinery capacity. It is expected to arrive on Saturday.

Four refineries hit by Katrina are still out of action and oil traders are concerned about how Rita could further affect capacity.

"Prices are going to be driven directly by the projected path of the storm," said John Kilduff, an analyst at Fimat USA.

On Tuesday, the oil producers cartel Opec agreed to offer all of its two million barrels per day of spare capacity to customers for three months from 1 October.

But the effects of the Opec decision were short-lived.

Staff protected

Energy firms have been evacuating hundreds of workers as Hurricane Rita headed to the Gulf of Mexico after pounding Florida and Cuba.

Shell, BP, Chevron, Apache, Anadarko, Exxon Mobil, Valero and ConocoPhilips all said they had taken steps to protect staff.

The US Minerals Management Service said that more than 70% of oil production in the Gulf had been shut down because of Rita.

According to the Service almost half of the manned offshore platforms and oil rigs in the Gulf had been evacuated.

Bill Greehey, chairman of oil company Valero, called Hurricane Rita the type of national disaster that could push oil and gasoline prices much higher.


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