Oil prices ease slightly despite fears over Hurricane Emily

OIL prices eased slightly yesterday having hit almost $62 on Friday, because of the bomb explosions in London and fears that a hurricane in the Atlantic could damage US oil rigs.

New York’s light sweet crude rose to $61.90 per barrel before easing to $60.85. Early on Thursday it had struck a record high point of $62.10 but fell by $4.08 dollars before finishing at $60.73.

In London, the price of Brent North Sea crude oil for delivery in August finished at $59.32 per barrel on Friday. It had hit a historic peak of $60.70 on Thursday.

Despite the easing over the weekend crude oil futures, a pointer to future trends, opened the week higher yesterday as oil companies in Mexico’s Yutacan peninsula evacuated workers and began to brace themselves for Hurricane Emily’s onslaught.

Oil workers in Iraq, fearful for their lives walked off the job on Sunday, as tension heightened in that troubled state. Analysts warned the decision could impact much-needed export revenue for the war-tattered nation and hurt global supply.

Trading in Singapore, for light, sweet crude for August delivery rose 73 cents in active trade to $58.82 a barrel before easing to $58.65, while Friday’s closing price in New York was $58.09, more than $4 below its record intraday price of $62.10 set on July 7.

Despite the slight easing, prices for oil are stubbornly high and remain more than 40% above what they were a year ago, analysts said.

Driving fears for traders at present is Hurricane Emily, now driving winds of 235km/h, and heading towards the Caribbean.

If this hurricane hits hard it is capable of instantly cutting off up to 3% of the global daily consumption of 84 million barrels of oil.

Forecasters hope however, that the hurricane will not smash into US rigs in the Gulf of Mexico, which is responsible for around 30% of total American output.

Mexico’s state oil company, Petroleos Mexicanos, has evacuated its Bay of Campeche staff on offshore rigs and closed its taps. Shell Oil Co. meanwhile, have abandoned three offshore facilities, suspending output of around 1,000 barrels daily and halting 20 million cubic feet of gas production.

As high oil prices persist, some analyst argue that up to 20% of the current price is driven by speculators suggesting a price of around $50 per barrel as the new norm.