Post-hurricane falls continue oil prices

21 October 2005
Oil prices continued to fall back from the highs of September when hurricane Katrina and Rita caused the shutdown of US refineries in the Gulf of Mexico. Crude fell marginally in the second week of October, with Spot Brent ending at $60.57 a barrel in London on 12 October, compared with $61.94 a barrel a week earlier. Any relaxation in supply concerns as US refineries and oil installations limped back online is likely to be tempered by ongoing concerns about long term capacity. In its weekly report on 11 October, Saudi Arabia's National Commercial Bank (NCB) warned of renewed pressure on oil prices as the northern hemisphere prepares for the cold winter months and the continuing effects of the two hurricanes.

'Fuel consumption in the past month fell by nearly 3 per cent compared with last year in the world's largest consumer,' it said. 'The fall in demand was also due to high oil and gas prices as well as economic slowdown in the hurricane-affected areas. Supply concerns remain, especially with refineries struggling to turn enough crude into heating oil in time for the winter with nearly 12 refineries being shut down along the [US] Gulf coast.'

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