Oil Prices Turn Higher Amid Fresh Hurricane Fears New York (AFP) Oct 21, 2005 World oil prices ended higher Friday after hitting three-month lows early in the day, getting a late lift amid concern over a shutdown of some Gulf of Mexico production due to Hurricane Wilma. New York's main contract, light sweet crude for delivery in December, rose 61 cents to 60.63 dollars per barrel in closing trades. It earlier had fallen to 59.15 dollars, the lowest level since July 28 and some 16 percent below its historic high of 70.85 dollars on August 30. In London, the price of Brent North Sea crude for December also turned higher in late trade, gaining 57 cents to close at 58.48 dollars a barrel. The uptick came after news from the US Minerals Management Service that some 66 percent of oil production had been shut in the Gulf of Mexico compared with 61 percent a day earlier. This surprised the market and highlighted fears about the unpredictable movement of the storm, which slammed into Mexico's Yucatan peninsula and was expected to move back to sea over the weekend. The government data showing a shutdown of some production because of Wilma "was really kind of unexpected," said Bill O'Grady, market analyst at AG Edwards. O'Grady said there was some buying amid fear that the storm could take an unexpected turn over the weekend. "We all remember Katrina," he said. "We went home on Friday with a category-one storm, it was expected to miss energy-sensitive areas and we came in the following Monday, it's was an apocalyptic circumstance in the energy market. What if we come in next Monday and we have Wilma become the next Katrina Rita?" O'Grady said a certain amount of cover purchases "make a lot of sense" even if most traders believe the storm will not affect US oil operations. "It's reasonable to assume that it probably won't become a major problem and that the shutdown we are seeing will probably not be there for more than a day or so," he said. Earlier, prices were sharply lower with New York crude below 60 dollars for much of the day. Prices were under pressure "from Wednesday's (US) stock data which showed a larger than expected rise in crude stocks and an unexpected rise in gasoline stocks", Sucden analyst Sam Tilley said. A stronger-than-expected report on US natural gas inventories also eased concerns about energy shortages going into the northern hemisphere winter. November natural gas ended at 12.872 dollars per million British thermal units, down 0.8 percent for the day, and off 2.6 percent for the week. Mike Fitzpatrick at Fimat USA said he sees crude oil falling back to levels of around 45 to 55 dollars a barrel as the speculative premium comes out of the market, although he noted some risks to this outlook. "Participants should also take caution," he said regarding events in Iraq. "An increase in saber-rattling against Iran or Syria or the next bit of strife in Nigeria could be the pivot on which another reversal higher could sit." "An early cold snap or snowfall in New York or Chicago could also lead to a change in psychology, as well. However, in the near term, participants probably remain confident that demand will soften, and therefore, without a specific physical supply threat, weakness should continue," Fitzpatrick said. Community Email This Article Comment On This Article Related Links SpaceDaily Search SpaceDaily Subscribe To SpaceDaily Express Powering The World in the 21st Century at Energy-Daily.com
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