AP, NEW YORK:
CRUDE-OIL PRICES rose yesterday as traders braced for the possibility that Hurricane Rita could smash into key oil facilities in Texas.
Workers fled oil rigs in the Gulf of Mexico less than a month after Hurricane Katrina tore through the same region. Rita strengthened into a Category 5 hurricane late Wednesday with sustained winds of 165 mph, the National Hurricane Center said, and is likely to hit Texas, the heart of U.S. oil production.
"Prices are going to be driven directly by the projected path of the storm," said John Kilduff, analyst at Fimat USA.
Light, sweet crude for November delivery rose 60 cents to settle at US$66.80 a barrel on the New York Mercantile Exchange, after surging as high as US$68.27 earlier Wednesday.
"The chance of it turning north to Louisiana is getting slimmer," said Agbeli Ameko, managing partner at the Denver-based energy research firm Enercast.com.
Data showing that gasolene and distillate fuel inventories rose in the last week came as a surprise to analysts and also helped prices ease off highs, but the calming effect was limited.
"It's a silver lining, but it's not positive enough to get traders to stop staring down Rita," Kilduff said.
The U.S. Department of Energy said Wednesday that U.S. gasolene inventories rose 3.4 million barrels to 195.4 million barrels in the week ended Sept. 16, still more than 5 per cent below year-ago levels.
Crude oil prices are nearly 45 per cent higher than a year ago. They reached an intraday record of US$70.85 on Aug. 30 after Katrina made landfall.
Forecasters said Rita will probably land Saturday somewhere between northern Mexico and western Louisiana, most likely along the central Texas Gulf Coast between Galveston and Corpus Christi.
The U.S. Minerals Management Service said Wednesday that 469 platforms in the Gulf are unstaffed, up sharply from 136 on Tuesday. More than 73 per cent of oil production in the region is blocked, up from 58 per cent Tuesday. More than 47 per cent of gasolene production, up from 35 per cent, is also blocked.
"Some of those refineries in Texas, they're at sea level. It's a table top, it floods every easily," said Ed Silliere, vice president of risk management at Energy Merchant LLC in New York.
Oil refining in Texas accounts for a quarter of the nation's total output of petroleum products, including gasoline and distillate fuels. According to the Energy Department, 18 of Texas' 26 refineries are located near the Gulf of Mexico, with a combined distillation capacity of 4 million barrels per day.
Rita is also thwarting recovery efforts as refineries gear up for the Northern Hemisphere winter, the peak season for production of distillate fuels, which include heating oil, jet fuel, kerosene and diesel.
The oil industry has lost production of more than 27 million barrels of oil since Aug. 26 -- about 5 per cent of the Gulf's yearly oil output, MMS said Wednesday.
