The approaching hurricane season in the Gulf of Mexico, heralded by Tropical Storm Arlene, refreshes memories of devastation caused by Hurricane Ivan last year, triggering worries of supply shortage in the winter months, when demand for crude is generally at its peak. The general market sentiment is that there will not be enough gasoline for the winter as demand is expected to outpace refinery capacity growth by roughly 1 million bpd, pushing oil prices over US$54. The latest IEA report indicates that demand would rise in the second half of the year.
Light, sweet crude for July delivery stood at US$54.26 a barrel, Brent crude for July fell to US$53.61 a barrel on London's IPE. Tropical Storm Arlene, the hurricane season's first named storm, developed Thursday in the northwest Caribbean Sea and was expected to enter the Gulf of Mexico by Friday. Total SA, Chevron Corp. and BP PLC have begun evacuation of nonessential staff from offshore facilities in the Gulf of Mexico.
Organization of Petroleum Exporting Countries (OPEC) seems to have agreed to currently maintain a status quo in production, but may raise its ceiling by 500,000 bpd. However, this estimate has had minimal impact on the market as OPEC members have been overproducing anyway. OPEC is producing about 30 million bpd despite an official ceiling of 27.5 million bpd.
13-Jun-05 
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