New storm fears stoke up oil prices
Oil prices leapt by more than $1 a barrel as tropical storm Wilma threatened to move into the oil-rich Gulf of Mexico by the end of the week.
American crude was up by $1.27 to $64.05 by late afternoon yesterday. The storm has winds of 45 mph and s forecast to strengthen in the next 24 hours as it moves west toward Honduras, Belize and Mexico.
The US National Hurricane Centre said Wilma, the 21st storm named this year, could become a full hurricane as early as tomorrow. Only in 1933 have there been as many storms as this year.
Rigs and refineries in the Gulf of Mexico have already been badly hit by hurricanes Katrina and Rita. Almost 67 per cent of American oil production from the region remains shut, and six refineries are still also closed.
Prices are not as high as the August peak, when they rose to $70 a barrel, but they are still up 47 per cent since January, and double what they were two years ago.
The FTSE 100 share index was up 0.66 per cent to 537.5p as shares in the oil sector performed well. BP shares rose by 2.61 per cent to 629.5p, while British Airways fell by 0.91 per cent to 299.75p.
Tensions over Iran, the world’s fourth biggest producer, also pushed the price of oil up, as the bombings in the south western town of Ahvaz on Saturday caused widespread resentment against the British.
Six people were killed by the bombs, detonated in a town at the heart of the Khuzestan province, the centre of Iran’s oil industry.
Britain, whose troops are just outside the area in neighbouring Iraq, has denied any involvement in the terrorist attacks.
Meanwhile, Opec has revised its 2005 world oil demand forecast down by 200,000 barrels a day to 1.2m barrels per day.
Updating previous forecasts, the 11- member oil cartel said that global demand would increase on average by 1.2m barrels per day this year compared with 2004, putting demand 1.4 per cent higher than last year.
Opec had previously estimated that demand would be 1.7 per cent higher this year, but said that demand had softened owing to the sustained high prices in the wake of hurricanes Katrina and Rita.