13 July 2005, 10:30  Oil prices rise towards 61 usd in Asian trade on US storm concerns

Oil prices climbed towards 61 usd a barrel in Asian trading hours on concerns that a new tropical storm could disrupt production on US rigs in the Gulf of Mexico, dealers said. At 11.15 am (0315 GMT) here, New York's main contract, light sweet crude for delivery in August, was at 60.76 usd a barrel, up 0.14 usd from its close of 60.62 usd in the US overnight. The contract jumped 1.70 usd overnight amid mounting fears that Gulf of Mexico oil platforms could be vulnerable to Tropical Storm Emily, which the US National Hurricane Center said has the potential to become a hurricane soon. Oil workers on Gulf of Mexico facilities have only just begun returning to work after being evacuated Friday in the face of Hurricane Dennis. Dennis, the first hurricane of this year's season, spared the oil rigs but led to production disruptions as workers were evacuated. "The market is worried about Tropical Storm Emily. Basically the market is very fearful of ongoing disruptions in the Gulf of Mexico," said David Thurtell, a commodities strategist with the Commonwealth Bank of Australia. "Coming on the back of what is already a pretty tight world market, the last thing we need is to lose up to a quarter of US production over a number of months." The Gulf of Mexico provides roughly 25 pct of the US's total crude production capacity and pumps approximately 1.5 mln barrels per day. Thurtell noted that oil prices rose by about 10 usd when Hurricane Ivan damaged Gulf of Mexico production facilities last year. "Some of the price rises we have seen in recent weeks have already reflected the risk of the hurricane season, so you may not get the same magnitude response this time," he said. "But I wouldn't have thought you would get out of it without price rises of 4-5 usd a barrel." Prices are already close to the record high of 62.10 usd seen last Thursday. The evacuation of rigs due to Hurricane Dennis led to a production loss of around 4.04 mln barrels of crude from last Friday to last Monday, according to the US government's Mineral Management Service. Analysts have said the disruptions could have an adverse impact on US crude inventories, with the Department of Energy due to release its closely watched weekly snapshot of stock levels later today.

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