Oil prices bounce back from lows

Oil prices have been soaring following storms in the Atlantic

Oil prices have bounced back from the early heavy falls triggered by the series of bomb attacks in London.

US light sweet crude recovered from a low of $57.20 a barrel, rising to $60.73, down 55 cents on the day.

In London, Brent crude fell to a session low of $55.55, before recovering to $59.28, down 57 cents.

Dealers said the initial sell-off was sparked by fears of a September 11- style economic slowdown in the wake of the London bomb blasts.

"The market is interpreting this as a re-acceleration in al-Qaeda activity which could lead to global economic slowdown," said Deborah White at SG Commodities.

"There are concerns that terrorism could impinge on demand» by hurting the fuel-dependent airline industry, said Refco oil analyst Marshall Steeves.

The rebound in crude prices was aided by a hurricane heading towards the Gulf of Mexico where much production and refining capacity could be at risk.

Recovery

More than 30 people were killed in London after explosions on the city's Underground network and a bus.

Speaking at the G8 summit in Gleneagles, Prime Minister Tony Blair said it was "reasonably clear" that London had been the target of "a series of terrorist attacks".

It is not 9/11 in its devastation or its impact on global demand Neumann Bearcat, Revco Markets fall after blasts

Just before news of the London blasts, crude had set a new record high of $62.10 as dealers watched for approaching hurricanes in the Gulf of Mexico.

Oil prices fell sharply after news of the explosions came through, but then recovered as traders returned to worrying about the hurricane threat to US production.

Commentators said the impact of the London blasts on the markets was likely to be short-lived.

"It is not 9/11 in its devastation or its impact on global demand," said Neumann Bearcat, senior vice president at Revco.

Disruption

In the Gulf, tropical storm Cindy hit production and refining operations after causing a cut in power supplies. The storm caused energy companies to shut in about 190,000 barrels a day of output, the US government said.

On Wednesday, tropical storm Dennis was upgraded to become the season's first official hurricane as it moved through the central Caribbean.

Last September's hurricane Ivan saw the Gulf lose out on 45 million barrels of oil output, helping to lift oil prices over $50 a barrel for the first time.