Oil prices mixed amid hurricane watch, ahead of OPEC meet New York (AFP) Sept 8, 2008 Crude oil prices closed mixed Monday as the market focused on a looming OPEC meeting expected to discuss an output cut and as Hurricane Ike headed toward energy installations in the Gulf of Mexico. New York's main contract, light sweet crude for delivery in October, rose 11 cents to close at 106.34 dollars a barrel. In London, Brent North Sea crude for October fell 65 cents to settle at 103.44 dollar per barrel. Analysts said the trend was generally weaker for oil but that traders were cautious with a new hurricane approaching. "Ike is singlehandedly supporting oil against the backdrop of softening demand," said Phil Flynn, analyst at Alaron Trading. "That softening demand creates a new set of problems with OPEC that has to deal with engineering a soft landing in energy prices but at the same time not make things worse by keeping prices too high and kill off even more demand." Ahead of Tuesday's meeting of the Organization of the Petroleum Exporting Countries in Vienna, Iran led calls for the cartel to slash output by ensuring that members did not exceed their official quota output. At present, OPEC is believed to be producing about one million barrels more than its quota of 29.67 million barrels per day (bpd), with Saudi Arabia accounting for most of the excess. OPEC produces about 40 percent of world oil. Oil prices have plummeted from record highs above 147 dollars in July, with the OPEC meeting seen as a test of what price level the cartel wants to defend. Algerian Energy Minister Energy Minister Chakib Khelil said Monday the OPEC oil cartel would discuss a cut in production at the meeting and that members saw "an oversupply problem." "Everybody agrees that we will have an oversupply problem of between half a million and one and half million (barrels per day) by early next year," said Khelil, who is acting OPEC president, as he arrived in the Austrian capital for the meeting. Asked if OPEC would cut its output, he replied: "I don't know. I think there will be a discussion on that." The market also was keeping an eye on Hurricane Ike, which was pounding Cuba Monday and projected to head late Tuesday into the Gulf of Mexico, where a quarter of US crude oil is produced, the National Hurricane Center said. "Until the direction of both Hurricane Ike and OPEC are clearer, the market has probably installed a floor at last week's lows," said Mike Fitzpatrick at MF Global. Anglo-Dutch oil giant Shell said Monday it would evacuate all its offshore personnel working in the Gulf of Mexico. Shell said it had already evacuated 150 workers and would move the remaining 500 of its employees in the Gulf by Wednesday. BP has begun to move personnel off its platforms in the Gulf of Mexico. BP and Shell account for a quarter of oil and gas production in the region.
earlier related report In morning trade, New York's main contract, light sweet crude for delivery in October, rose 2.69 dollars to 108.92 dollars a barrel from its close in New York floor trading on Friday. Brent North Sea crude for October surged 2.59 dollars to 106.68 dollars a barrel. "Oil prices are reacting to the threat of Hurricane Ike, which is heading toward the Gulf of Mexico," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore. "In the short term, hurricanes will determine the price direction of crude oil. It's likely that the market will test new lows this month if the hurricane season does not do any damage to oil production in the Gulf of Mexico." The hurricane slammed into Cuba on Sunday, officials said. Ike, packing 120-mile (195-kilometre) per hour winds, earlier left dozens of people dead in a rampage across Haiti. The hurricane is expected to eventually churn past Florida into the Gulf of Mexico and sweep toward Louisiana and the storm-battered city of New Orleans as early as Tuesday. Last week, Hurricane Gustav forced the closure of US oil production in the Gulf, but analysts said the storm did little long-term damage to oil rigs and production platforms there. Oil prices, which rose to record highs above 147 dollars in July, had tumbled to five-month lows close to 104 dollars last week as the cooling global economy stoked fears of waning energy demand. After hosting the 2008 Olympic Games last month, China had cut its imports of gasoline and diesel, Shum said, adding that slowing demand in the eurozone and the rest of Asia was likely to weigh on oil prices. Shum said the market was also closely watching the results of a policy meeting on Tuesday by oil ministers of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna. Some analysts are expecting the ministers to agree to trim output to help keep crude above 100 dollars a barrel. "I think in the end, OPEC's actions -- whether it will be at tomorrow's meeting or in the next month or two -- will be the key to determine prices for the rest of the year," Shum said. Community Email This Article Comment On This Article Share This Article With Planet Earth
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Shell says it will evacuate personnel ahead of Hurricane Ike London (AFP) Sept 8, 2008 Anglo-Dutch oil giant Shell said Monday it would evacuate all its offshore personnel working in the Gulf of Mexico, now threatened by Hurricane Ike. |
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