Prices fall, but worries linger

07 October 2005
Spot Brent prices stepped down to $63.18 a barrel in London on 28 September, compared with $64.20 a barrel a week earlier. However, the oil markets continued to remain jittery with looming shortages in products and refineries yet to complete a full assessment of the damage caused by Hurricane Rita.

'The decrease [in price] was more of a knee-jerk reaction to the blowing over of Rita. The worst seems to be over, but a true picture will emerge only after a full assessment is made of the damages caused by both the hurricanes,' says a Dubai-based oil trader. Hurricane Rita was preceded a week earlier by Hurricane Katrina, which caused extensive damages to oil installations and refineries in the East Coast.

Several refineries are yet to restart operations after suffering damage and electricity outages in key oil production areas in Texas and Louisiana. A total of 20 refineries accounting for 4.8 million barrels a day (b/d) of crude oil processing capacity, or 28 per cent of the US daily total requirements, have been shut down since mid-September. Crude oil production of 1.5 million b/d in the Gulf of Mexico also continues to be completely shut down.

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