The hurricane season in USA seems to be taking its toll on global oil prices. Just recovering from the passing of a weakened Hurricane Dennis, the Gulf of Mexico seems to be faced with the fresh onslaught of Tropical Storm Emily. Emily comes after US oil platforms and refineries have largely escaped Hurricane Dennis. Concerns that Tropical Storm Emily could end up as a hurricane and damage oil rigs in the Gulf of Mexico, has triggered an oil price hike.
World oil prices that had dipped earlier this week, rocketed by more than US$2. New York's main contract, light sweet crude for delivery in August, jumped by almost US2.23 to record a high of about US $61.15 per barrel in the early deals. The price of Brent North Sea crude oil for delivery in August also shot up to about US $59.42 per barrel in London.
The Gulf of Mexico contains roughly 25% of the United States' total crude production capacity and pumps approximately 1.5 million bpd. A hike in oil prices was not anticipated after Hurricane Dennis passed through the region without damaging plants and causing injuries at the US oil platforms and refineries, but with the onset of Emily things seem to look different. The evacuations of US oil rigs have recorded a plunge of about 96.2% in Gulf of Mexico production on Monday. The threat of Hurricane Dennis translated to a production loss of around 4.04 million bpd of crude over the period of July 8-11. This drop in production will definitely have an impact on inventory levels, scheduled to be released today.
Now we have to wait until Emily strikes to know its consequences on the market.
13-Jul-05 
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