- The Washington Times - Friday, September 12, 2008

LONDON (AP) – Oil prices pushed above $102 a barrel Friday as Hurricane Ike swept up from the Gulf of Mexico, prompting companies along the Texas coast to shut down refining and drilling operations.

By afternoon in Europe, light, sweet crude for October delivery rose $1.25 to $102.12 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.71 to settle at $100.87 on Thursday after dropping as low as $100.10 per barrel. The last time Nymex crude traded below the $100 mark was April 2.

Exxon Mobil Corp., Valero Energy Corp., ConocoPhillips and Marathon Oil Co. have begun halting operations as Ike headed straight for the nation’s biggest complex of refineries and petrochemical plants. U.S. wholesale gasoline prices spiked 30 percent Thursday.

“According to estimates made by the Minerals Management Service, about 97 percent of crude production and more than 93 percent of gas output in the U.S. part of the Gulf of Mexico were idle in preparation for the storm,” wrote analysts from JBC Energy in Vienna, Austria.

“In addition, some 11 refineries, which represent more than 16 percent of total U.S. refining capacity, have shut down operations.”

“You have some refineries shutting to prepare for hurricane damage,” Tetsu Emori, a commodity markets fund manager with ASTMAZ Futures Co. in Tokyo. “That’s triggered some buying, especially in oil products such as gasoline and heating oil.”

The storm was centered about 230 miles southeast of Galveston, Texas, on Friday morning, moving to the west-northwest near 13 mph. Ike was a Category 2 storm with maximum sustained winds near 105 mph.

The storm was expected to strike the Texas coast early Saturday. Forecasters said the storm was likely to come ashore as a Category 3, with winds up to 130 mph. The upper Texas coast accounts for one-fifth of U.S. refining capacity.

Ike is huge, taking up nearly 40 percent of the Gulf of Mexico. The National Hurricane Center said tropical storm-force winds of at least 39 mph extended across more than 510 miles.

Ike, along with last week’s Hurricane Gustav, have helped keep oil prices from falling faster, as concerns over a slowdown in global economic growth have pushed prices down from a record $147.27 set on July 11.

“Oil demand on a global basis is quite pessimistic,” Emori said. “If it wasn’t hurricane season, crude would be under US$100 already.”

In other Nymex trading, heating oil futures rose 3.88 cents to $2.954 a gallon, while gasoline prices gained 9.24 cents to $2.841 a gallon. Natural gas for October delivery gained 0.3 cent to $7.251 per 1,000 cubic feet.

In London, October Brent crude rose 0.67 cents to $98.31 a barrel on the ICE Futures exchange, after it closed Thursday at a six-month low.

Associated Press writer Alex Kennedy contributed to this report from Singapore.

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