Reply #18: Oil, Gas May Soar as Storm Shuts U.S. Gulf Production [View All]

[Barrett808]

Aug. 28 (Bloomberg) -- Crude-oil and natural-gas prices may soar after Hurricane Katrina moved into production regions of the Gulf of Mexico, forcing companies including Exxon Mobil Corp. and Chevron Corp. to close operations.

Royal Dutch Shell Plc said it shut 420,000 barrels of daily oil production in the Gulf. The Louisiana Offshore Oil Port, which handles about 11 percent of U.S. imports, closed yesterday. Katrina is one of the most powerful storms ever to enter the Gulf, source of about 30 percent of U.S. oil production and 24 percent of the country's natural gas.

``Forecasters are saying Katrina could do more energy damage than any storm in recent years,'' said Jason Schenker an economist with Wachovia Corp. in Charlotte. ``It's not just that there's going to be outages for the next couple of days. With shutdowns and damage at platforms and refineries, the bullish impact could be felt for the rest of the year.''

Crude oil for October delivery on the New York Mercantile Exchange dropped $1.36, or 2 percent, to close at $66.13 a barrel on Aug. 26. Prices fell amid forecasts that Katrina would stay closer to Florida and miss most producing regions of the Gulf. The futures touched a record $68 a barrel Aug. 25 as the storm gained strength.

``I think it is easily conceivable that we could see crude futures hit $70 this week,'' Schenker said.

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