Oil above $67 as Katrina threatens

OIL held above $67 a barrel yesterday as dealers feared Hurricane Katrina could threaten Gulf of Mexico rigs supplying the United States, the world's largest fuel burner.

A sabotage blast at a well in Iraq's northern Kirkuk oilfield only added to worries about stretched crude production.

US light crude was down 4 cents at $67.45 after hitting a record $68 on Thursday. London Brent crude was off 3 cents at $66.24.

Despite record oil prices, the US economy is proving relatively resilient to a rally that has more than doubled the cost of oil since 2003.

"The flexibility of our market-driven economy has allowed us, thus far, to weather reasonably well the steep rise in spot and futures prices for crude oil and natural gas that we have experienced over the past two years," US Federal Reserve chairman Alan Greenspan said yesterday.

Oil and gas producers in the US Gulf were hoping to ride out rough weather ahead. Hurricane Katrina's projected track runs east of the heart of oil and gas production, but at least five companies were battening down the hatches.

The 11th-named storm in the Atlantic hurricane season forced at least four firms to evacuate workers from the Gulf of Mexico, source of 25% of US domestic oil and gas output.

"The impact of Katrina is a bit limited now. But there will be more to come," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures in Tokyo.

Oil dealers also focused on OPEC producer Nigeria, where fuel price rises issued on Friday could lead to general strikes.

Oil prices, averaging $54.11 this year, are sparking concern over economic growth as governments, businesses and consumers feel the pinch of high fuel bills.

With no end in sight to a rally that has pushed oil towards an inflation-adjusted $82 reached in 1980, some European and Asian governments are urging consumers to conserve fuel.