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Oil rebounds on storm worries
SINGAPORE
Petroleumworld.com, Aug 29, 2008
Oil prices rebounded in Asian trading on Friday as traders kept a close watch on a storm moving toward the Gulf of Mexico and key oil installations, analysts said.
In afternoon trade, New York's main contract, light sweet crude for delivery in October, rose 1.51 dollars to 117.10 dollars a barrel after a drop of 2.56 dollars in New York on Thursday.
Brent North Sea crude for October gained 1.28 dollars to 115.45 dollars a barrel.
The contract shed 2.05 dollars Thursday in London.
"Still we have to worry about the hurricane's effect on this market," said Ken Hasegawa, manager of the energy desk at Newedge Japan brokerage in Tokyo.
He said the storm should support prices for up to three more days.
About a quarter of US crude oil installations are located in the Gulf of Mexico.
Tropical Storm Gustav was threatening to regain hurricane strength before entering the Gulf over the weekend. It was expected to make landfall in Louisiana and Texas on Monday, according to the US National Hurricane Center.
British oil group BP and US rivals ConocoPhillips and Shell said they were evacuating workers from their energy installations in the Gulf of Mexico ahead of the storm.
The threat of Gustav raised grim memories of the 2005 hurricanes Katrina and Rita that damaged or destroyed about 165 of about 4,000 oil platforms in the Gulf.
Mike Fitzpatrick at MF Global said that "even if the damage from the approaching storm is fractional it could still be significant" because of limited capacity.
"The environment of sparse capacity means that every barrel of oil lost to the marketplace will be felt, particularly as the Northern hemisphere's winter is just around the corner," he said.
Hasegawa said the market could also get support from the closing of short positions ahead of the Labour Day holiday on Monday when US trading is closed.
World oil prices have sunk from record highs above 147 dollars a barrel in early July after surging from 100 dollars at the start of the year.
Analysts say the struggling economy in the United States, the world's biggest energy consumer, has curbed demand for oil .
Story from AFP
AFP 29 0748 GMT 08 08
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