World oil prices rose on Friday, boosted by production stoppages due to a severe hurricane in the Gulf of Mexico and worries that another storm might further delay imports into the United States. U.S. light crude gained 24 cents to $44.12 a barrel, while London's Brent crude rose 38 cents to $41.13. About 4 million barrels of crude oil output was stopped this week up to Thursday as oil companies in the Gulf of Mexico closed operations and evacuated thousands of workers as a precaution against Hurricane Ivan, the sixth-strongest Atlantic storm on record. Oil workers began returning to platforms and drilling rigs late on Thursday after Ivan passed through and hit land and refiners were preparing to restart plants after more than 1.5 million barrels per day (bpd) of processing capacity was shut.
"The shut in production clearly contributed to the upward bias in natural gas and crude oil prices this week and could pull back in the wake of the storm if facilities prove to be intact," said investment bank Merrill Lynch. "We expect this outage to affect oil and natural gas inventory builds over the next few weeks. The loss of production over this period coupled with the disruption to imports offloading in the Gulf of Mexico being the key factors." A string of storms in the last month has reduced U.S. crude inventories in recent weeks. Dealers are concerned that disruptions to U.S. Gulf crude production and refinery operations may hamper stock building of heating fuels ahead of winter. The government's energy statistics arm said this week crude inventories were running at a six-month low and at a 3 million-barrel deficit to year-ago levels after seven successive weeks of stock falls.
JEANNE FOLLOWS
Oil traders are now following the development of tropical storm Jeanne, which brought heavy rain and winds to the Dominican Republic on Thursday after briefly reaching hurricane status. "There will still be shipping delays, especially with Hurricane Jeanne behind it (Ivan)," Ed Silliere at Energy Merchant LLC, said about Jeanne, which was not expected to enter the Gulf of Mexico but could delay shipping and oil imports. "Even though Ivan was not as bad as we thought, it can take a while to bring back up refineries and there could be lingering damage," he said. OPEC, which raised the official output ceiling by a million bpd at its recent meeting, said on Thursday it expected world oil stockpiles to grow by well over 1 million bpd in 2004 due to increased supplies and despite record-breaking demand growth. The cartel in its report also estimated demand for OPEC crude next year, assuming no stock change, would average more than 2 million bpd less than existing cartel supply. The numbers may concern ministers of the Organisation of the Petroleum Exporting Countries, many of whom think high oil prices are not justified by market fundamentals. Some are talking about possible supply cuts when OPEC meets again in December. OPEC pumped 29.8 million bpd in August, the report said, up from an average of 26.96 million bpd in 2003. Supply is set to break 30 million bpd this month or next and OPEC ministers have said they would keep delivering high volumes to pressure prices. Concerns over Middle East supply security persisted after an oil pipeline was set on fire on Thursday near the Iraqi town of Baquba, 65 km (40 miles) north of Baghdad, witnesses said. The cause of the fire in the pipeline, part of the domestic network, was not immediately clear. This week saboteurs halted oil exports to Turkey when they blew up a pipeline through which Iraq had been exporting between 200,000 and 300,000 bpd of crude. The main northern export pipeline was blown up by saboteurs earlier this month.///