The Guardian (UK): Oil prices close to record as Katrina shuts down production: “Shell, the Gulf's largest producer, said two of its drilling rigs were adrift. It had evacuated almost 1,000 employees and shut down production of 420,000 barrels a day. It said it would fly a reconnaissance plane as soon as conditions were safe, but it would be a couple of days before it could properly assess the damage.”: Tuesday August 30, 2005
David Teather in New York
Oil and gas prices stayed close to record highs yesterday as energy firms waited anxiously to begin assessing the damage wreaked by hurricane Katrina on the most important oil-producing region in the United States.
US crude oil closed at $67.20 a barrel in New York after reaching the record level of $70.80 on Sunday. Oil prices had never before breached $70 a barrel, although adjusted for inflation they are still lower than in the early 1980s. Gas prices soared by around 20%.
Energy firms including BP, Royal Dutch Shell, Exxon Mobil and Total evacuated workers from rigs and refineries in the Gulf of Mexico over the weekend before the storm's arrival. The US government said 615 platforms and 96 rigs were cleared of people.
Shell, the Gulf's largest producer, said two of its drilling rigs were adrift. It had evacuated almost 1,000 employees and shut down production of 420,000 barrels a day. It said it would fly a reconnaissance plane as soon as conditions were safe, but it would be a couple of days before it could properly assess the damage.
The US Minerals Management Services said more than 90% of the Gulf's oil production and 83% of its gas production had been shut down. The region produces 1.5m barrels a day. At least eight refineries were closed. An estimated 35% of US oil production and 23% of its natural gas comes from the Gulf of Mexico.
Opec president Sheikh Ahmad al-Fahd al-Sabah said he would propose raising the cartel's output target by 500,000 barrels per day at its September meeting. Saudi Arabia indicated it is ready to boost output and the US department of energy said it was in talks with the energy industry about potentially loaning oil from its emergency stockpile.
Meanwhile insurers were braced for a huge bill, with some estimates as high as $25bn (£14bn). Hurricane Andrew, which hit Southern Florida in 1992, cost insurers $21bn at today's prices.
Wall Street otherwise shrugged off the storm. Shares in energy firms rose as traders reckoned insurers would cover damages and a rising oil price could bring further bumper profits. The Dow Jones index of leading shares closed up 65.76 points at 10463.05.
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