Markets brace for Rita

30 September 2005
The oil markets reacted nervously to the arrival of another category 4 hurricane in the Gulf of Mexico - home to most of the US' oil refineries - just weeks after the devastation of Hurricane Katrina. Spot Brent climbed to $64.20 a barrel in London on 21 September, up from $63.57 a week earlier, as television pictures showed Hurricane Rita smashing its way through the Florida Keys and across the Gulf. US light sweet crude prices climbed to $67.30 a barrel.

Analysts expected further rises as meteorologists forecast that it could hit the oil production facilities on the Texas coastline. 'We are keeping a close watch on the eye of the storm. A clearer picture on its impact [on oil prices] will be available later this week,' said a Dubai-based oil trader. 'This is still a very jittery market.'

The previous day, following a two-day meeting of oil ministers in Vienna, OPEC offered to release an additional 2 million barrels a day from 1 October for a 90-day period, in an attempt to ease price pressures. But the offer did not have the desired impact, with the US' Energy Department stating the same day in its weekly report that crude oil stocks had fallen more steeply than expected.

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