Posted on 09/22/2005 3:25:54 AM PDT by RWR8189
LONDON (Reuters) - Oil raced toward $68 on Thursday as Hurricane Rita bore down on Gulf of Mexico oil and gas production and forced six refineries in Texas to shut down.
Companies scrambled to close facilities and evacuate staff as Rita, now a maximum Category 5 storm, aimed her 175 mph (280 kph) winds on Texas, home to a quarter of U.S. refining capacity. It is expected to hit land by early Saturday.
"Rita will remain the market's focus ... unless it unexpectedly breaks apart. But with it being such a fierce storm we wouldn't play the short side of the market until Rita has passed from the scene," analysts at Refco said.
U.S. light crude was up $1.02 at $67.82 a barrel at 0839 GMT, just below Wednesday's three-week high of $68.27.
London Brent crude was up 84 cents at $65.57.
With 18 of Texas' 26 refineries located near the Gulf of Mexico coast, the Energy Information Administration said Rita -- the third most intense Atlantic hurricane on record gauged by internal pressure -- could have a "substantial impact."
"We do not think we have seen the peak for oil," analysts at Barclays Capital said in a report.
Six Texas refineries have closed as a precaution ahead of Rita, which at 0600 GMT was just 540 miles from shore, suspending total daily output capacity of 1.4 million barrels.
Together with the four facilities still closed in Louisiana and Mississippi after Katrina, around 14 percent of U.S. refining capacity is now offline. But the plants in Texas, which are above sea level, face a smaller risk of flooding than the Louisiana refineries that bore the brunt of Katrina.
(For "FACTBOX-Hurricane Rita shuts 6 Texas refineries, oil output", click on
Gasoline futures rose 9.59 cents to $2.1490 a gallon, taking gains since Friday to some 20 percent as dealers feared refinery closures would strain supplies. Heating oil was up 3.88 cents to $2.0775 a gallon.
"Having more or less traveled together, refined products and crude have become disconnected in recent weeks," said Andrew Harrington, resources analyst at ANZ Bank in Sydney.
"While crude is still moving there are serious refining constraints. With question marks over the damage Rita is likely to cause we're seeing the continuation of a most unusual month."
INVENTORIES RECOVERING
But prices, still below the record-high of $70.85 a barrel touched in Katrina's wake, were kept in check by a government report showing U.S. gasoline stocks rose as demand faltered.
The surge in prices this year -- up 56 percent since January -- is starting to curtail consumption. Supplies of winter fuel heating oil added to their year-on-year surplus.
The approach of Rita put recovery efforts after Katrina on hold as oil firms evacuate hundreds of workers from offshore production facilities in the Gulf of Mexico, an area responsible for a third of U.S. oil production.
It also forced refineries to shut down, including BP's 470,000-barrel-per-day (bpd) refinery in Texas City and Shell's 340,000-bpd plant in Deer Park.
Royal Dutch Shell said Rita had shut in 161,000 barrels of its oil output and 438 million cubic feet of gas.
The arrest of a Nigerian warlord over "treasonable" comments this week brought his supporters to the streets, threatening violence and putting supplies from the world's eighth largest exporter of crude at risk.
Shell evacuated staff from its headquarters as a precaution in a region that accounts for most of Nigeria's 2.4 million-bpd oil output.
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Unleaded Gasoline
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Several "experts" are predicting spikes of $4/gal. Fill up tonight.
Already topped the tank at 2.56 a gallon.
Curse or blessing, it was raining to beat the band. Because my daughter needed to get into the car fast, I slammed the sliding door open and it came off the track!!!
We were able to get it closed for the drive home, but we won't be going anywhere for a while.
Oh well, I have a full tank!
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