Monday September 8, 2008
Oil jumps in Asia as Ike threatens Gulf of Mexico
SINGAPORE (AP) - Oil prices jumped Monday in Asia as Hurricane Ike looked poised to slam into the Gulf of Mexico later this week, delaying efforts to bring oil and gas production back online in a region still recovering from Hurricane Gustav.
Light, sweet crude for October delivery rose US$2.57 to US$108.80 a barrel in electronic trading on the New York Mercantile Exchange midday in Singapore.
The contract fell Friday by US$1.66 to settle at US$106.23, a five-month low. Royal Dutch Shell said it would keep staffing at its offshore Gulf installations, which it reduced ahead of Gustav last week, to a minimum as it monitors Ike.
"Companies are caught between restarting production after Gustav and making preparations for Ike,'' said David Moore, a commodity strategist at Commonwealth Bank of Australia in Sydney.
"These storms are very unpredictable, but Ike's likely movement puts it into the Gulf area.''
Early Monday, Ike was a Category 3 hurricane with sustained winds near 120 mph (193 kph), located about 30 miles (48.3 kilometers) east of Punto de Sama on eastern Cuba's coast, and moving west at 14 mph (22.5 kph).
It was forecast to track over Cuba, re-emerging over the island's western coast Tuesday morning about 100 miles south of Key West as a Category 1.
U.S. President George W. Bush declared a state of emergency for Florida because of Ike on Sunday.
A weaker dollar against the euro also helped boost oil prices.
A falling greenback spurs investors to buy commodities like oil and precious metals, which are traditionally seen as hedges against inflation.
The euro surged Monday to US$1.4417 from US$1.4266 late Friday in New York, while the dollar rose to 108.61 yen from 107.72 Friday.
Investors are also waited to see what action OPEC will take at its next meeting Tuesday in Vienna.
Some members of the Organization of the Petroleum Exporting Countries has indicated it may take action to defend the US$100 a barrel level.
Crude has plunged about US$38, or 26 percent, since surging to a record US$147.27 a barrel on July 11.
In other Nymex trading, heating oil futures rose 7.5 cents to US$3.0578 a gallon, while gasoline prices jumped 9.4 cents to US$2.78 a gallon.
Natural gas for October delivery gained 25.1 cents to US$7.7 per 1,000 cubic feet.
In London, October Brent crude rose US$2.41 to US$106.50 a barrel on the ICE Futures exchange.
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