Oil rises on worries Storm Fay may disrupt supply
Monday August 18, 4:29 am ET
By Alex Kennedy, Associated Press Writer
Oil prices rose Monday in Asia on concerns that Tropical Storm Fay may
disrupt oil operations in the Gulf of Mexico. Light, sweet crude for
September delivery rose 56 cents to $114.33 a barrel in electronic trading
on the New York Mercantile Exchange by midafternoon in Singapore.
Oil rises above $114 on concerns Tropical Storm Fay may disrupt Gulf oil
operations
SINGAPORE (AP) -- Oil prices rose Monday in Asia on concerns that Tropical
Storm Fay may disrupt oil operations in the Gulf of Mexico.
Light, sweet crude for September delivery rose 56 cents to $114.33 a barrel
in electronic trading on the New York Mercantile Exchange by midafternoon in
Singapore. The contract fell $1.24 on Friday to settle at $113.77 a barrel.
"There could be some supply disruption issues there so the market is
watching this closely," said Mark Pervan, senior commodity strategist at ANZ
Bank in Melbourne.
Fay, the sixth storm of the 2008 Atlantic season, was slowing down early
Monday and moving erratically, but forecasters still expected it to
strengthen slowly to a hurricane. Fay has already killed at least five
people after battering Haiti and the Dominican Republic with weekend
torrential rains and floods.
Oil giant Royal Dutch Shell has evacuated about 360 staff from the Gulf of
Mexico over the past two days.
At 300 GMT, Fay was centered about 275 kilometers (170 miles) southeast of
Havana and 375 kilometers (235 miles) south-southeast of Key West, Florida,
according to the U.S. National Hurricane Center in Miami.
It had maximum sustained winds near 85 kph (50 mph) and was moving
west-northwest at 17 kph (10 mph).
Forecasters expected the storm to begin moving more to the northwest later
on Monday. Current models show the storm moving up the western coast of
Florida, although forecasters still didn't know exactly where it will make
landfall.
So far during this year's hurricane season in the Atlantic Ocean, no storm
has significantly damaged oil installations in the Gulf.
"The market will probably get through this hurricane news pretty quickly,"
Pervan said.
A weaker dollar also supported oil prices. The euro strengthened to $1.4732
on Monday and the dollar was steady above 110 yen.
A falling dollar typically pushes oil prices higher as investors buy crude
and other commodities as hedges against inflation.
A forecast from the Organization of Petroleum Exporting Countries on Friday
of lower global oil demand growth helped to keep prices from rising higher.
In its monthly oil report, the organization forecast world appetite for oil
this year would grow by 1 million barrels a day, a reduction of 30,000
barrels a day from its previous forecast for demand growth for 2008. It also
said growth for 2009 will be 900,000 barrels a day, which it said would be
the lowest growth in world demand since 2002.
Demand growth from the major industrialized countries will actually decline,
OPEC said, with non-OECD countries accounting for all oil demand growth next
year.
"It's another signal that conditions are easing," Pervan said.
In other Nymex trading, heating oil futures fell 0.37 cent to $3.1154 a
gallon (3.8 liters) while gasoline prices gained 0.48 cent to $2.865 a
gallon. Natural gas futures fell 13.7 cents to $7.955 per 1,000 cubic feet.
