Wilma’s course steadies oil price

OIL steadied above $63 (€52.63) a barrel yesterday as Hurricane Wilma seemed to set its course away from vulnerable rigs and refineries in the Gulf of Mexico.

Wilma has strengthened to a catastrophic Category 5 storm as it approaches Cuba and Mexico. Its path is expected to take it across southern Florida and away from the Gulf’s storm-battered oil and gas facilities.

The market’s focus shifted to US oil stocks data due later yesterday. The figures will show how the world’s biggest oil consumer is coping with the loss of much of its refining and oil output after the most intense hurricane season for decades.

ABN AMRO’s John Brady said: “If we see softening figures for demand, then it could take the market down. Hurricanes affected supplies and the demand side was roaring, but now production is coming back online and we’re seeing demand erode.”

US refineries are gradually resuming normal operations after August and September’s storms. Five plants are still shut along with two-thirds of Gulf of Mexico oil output.

Man Financial’s Edward Meir said: “We maintain our general view that these markets have to be given some respect given the fact that we still have sizeable outages going into Q4.”

OPEC has been pumping near full tilt to fill the supply gap and the cartel expects to boost its production capacity to 38 million bpd by 2010 from 32.5 million bpd this year.

US crude was up nine cents at $63.29 a barrel yesterday, after losses of $1.16 on Tuesday. London Brent crude was up 13 cents at $59.41.

Tensions with OPEC’s second-biggest producer, Iran, mounted. Diplomatic and industry sources said Iran was blocking British and South Korean goods in an apparent attempt to force the two to drop their opposition to Tehran’s nuclear programme.

Oil and gas exports have not been affected.

Analysts say there is little OPEC can do to tame prices, which have risen 50% this year and are still within sight of August’s $70.85 record high.

Head of the International Monetary Fund, Rodrigo Rato, saw fuel consumption holding up: “We don’t see a great reduction in demand. There have been some hints demand will be receding in the second quarter, but we see strong demand in the world.”

But he said consumers in Asia, where rapid demand growth last year helped drive oil’s rally, had not yet felt the full impact of recent price rises.