Thunder Horse, the world's largest semi-submersible platform, which was tilting after Hurricane Dennis hit the Gulf, is seen in this photograph taken July 12. The Bush administration said it was considering whether to use the Strategic Petroleum Reserve in response to any supply disruptions caused by Hurricane Katrina, which hit New Orleans yesterday after swirling through the Gulf of Mexico. The petroleum stockpile consists of more than 700 million barrels of crude oil stored in underground salt caverns in Louisiana and Texas. - REUTERS
NEW YORK AP:
UNITED STATES stocks rallied yesterday after Hurricane Katrina weakened, easing concerns about refinery outages along the Gulf of Mexico and pulling oil prices back from record highs.
The Dow Jones industrial average climbed 65.76, or 0.63 percent, to close at 10,463.05. Last Friday, the Dow had its lowest close in seven weeks.
Stocks opened lower but quickly rebounded as crude oil futures cooled after surging past US$70 a barrel in early trading on news that the storm shut down about eight per cent of U.S. refining capacity. A barrel of light crude settled at US$67.20, up US$1.20 on the New York Mercantile Exchange.
Investors found some relief in reports that President Bush was mulling whether to offset the supply disruption with oil from the nation's petroleum reserve, but energy and insurance stocks still came under pressure as the market tried to gauge the hurricane's financial impact.
Jim Dunigan, chief investment officer for PNC Advisors, said the market had braced for the storm and started looking elsewhere for direction after the Gulf Coast got "hit full force and survived."
"It's not likely this is going to have a significant impact on growth," Dunigan said. "If it's not going to have a significant impact on energy, we're still in pretty good shape."
LATE ADVANCES
Much of Wall Street's advance came late in the day, when the hurricane eventually diminished to a Category one storm. With Katrina passing through the heart of the United States' oil and gas infrastructure, the market weighed a spike in energy prices against the potential for long-term production outages. The storm forced the Louisiana Offshore Oil Port - the nation's largest import terminal - to evacuate workers and stop unloading ships over the weekend.
"Clearly it's going to have some impact on the market if there is damage that will keep the port closed," said John Caldwell, chief investment strategist for McDonald Financial Group.
Home Depot Inc. and Lowe's Cos. also advanced on optimism that consumers spent more at the home improvement stores as they readied for the hurricane, and that they could be buying materials to repair storm damage.
