(UPDATE) Oil prices up sharply in Asia on hurricane threat
Agence France-Presse
First Posted 10:55:00 09/08/2008
Filed Under: Foreign Exchange Markets, Soft Commodities, Oil & Gas - Upstream activities
SINGAPORE -- World oil prices rebounded sharply from five-month lows in Asian trade Monday on worries that hurricane Ike will threaten production facilities in the US Gulf Coast, analysts said.
In morning trade, New York's main contract, light sweet crude for delivery in October, rose $2.69 to $108.92 a barrel from its close in New York floor trading on Friday.
Brent North Sea crude for October surged $2.59 to $106.68 a barrel.
"Oil prices are reacting to the threat of hurricane Ike, which is heading toward the Gulf of Mexico," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.
"In the short term, hurricanes will determine the price direction of crude oil. It's likely that the market will test new lows this month if the hurricane season does not do any damage to oil production in the Gulf of Mexico."
The hurricane slammed into Cuba on Sunday, officials said. Ike, packing 195-kilometer-per-hour winds, earlier left dozens of people dead in a rampage across Haiti.
The hurricane is expected to eventually churn past Florida into the Gulf of Mexico and sweep toward Louisiana and the storm-battered city of New Orleans as early as Tuesday.
Last week, hurricane Gustav forced the closure of US oil production in the Gulf, but analysts said the storm did little long-term damage to oil rigs and production platforms there.
Oil prices, which rose to record highs above $147 in July, had tumbled to five-month lows close to $104 last week as the cooling global economy stoked fears of waning energy demand.
After hosting the 2008 Olympic Games last month, China had cut its imports of gasoline and diesel, Shum said, adding that slowing demand in the euro zone and the rest of Asia was likely to weigh on oil prices.
Shum said the market was also closely watching the results of a policy meeting on Tuesday by oil ministers of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna.
Some analysts are expecting the ministers to agree to trim output to help keep crude above $100 a barrel.
"I think in the end, OPEC's actions -- whether it will be at tomorrow's meeting or in the next month or two -- will be the key to determine prices for the rest of the year," Shum said.
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