LONDON, 1 September 2005 — Oil prices eased yesterday after the United States said it would release oil from its Strategic Petroleum Reserve to help refineries left short of crude after Hurricane Katrina battered platforms. OPEC later said it would do its utmost to ensure the stability of the global oil market in the wake of Katrina and would discuss the means at its summit in Vienna on Sept. 19-20.
New York’s main contract, light sweet crude for delivery in October, fell 31 cents to $69.50 per barrel after earlier rising above $70. It had surged to an all-time high of $70.85 on Tuesday, as traders evaluated the damage to US oil facilities caused by Katrina, which tore through the Gulf coast on Monday and is said to have killed hundreds of people.
The price of Brent North Sea crude oil for delivery in October dropped 57 cents to $67.00 per barrel yesterday, after striking a record peak of $68.89 on Tuesday.
Current prices remain more than double the levels reached in 2003.
The United States prepared yesterday to open its emergency oil reserves for the first time in a year to replenish Gulf Coast refinery operations devastated by Hurricane Katrina.
Energy Secretary Samuel Bodman said the White House decided late Tuesday to tap the Strategic Petroleum Reserve following a request from the oil industry. “We worked through it and it was approved,” Bodman told MSNBC television. More details would come later, officials said.
The United States keeps 700 million barrels of oil stored in four underground salt caverns on the Texas and Louisiana coasts to cushion oil markets during supply disruptions. The reserve, which was created during the 1970s oil shocks, was last used after Hurricane Ivan in September 2004, when five million barrels of crude oil were released.
According to US government data, Katrina shut down an estimated 95 percent of crude production and 88 percent of natural gas output in the Gulf of Mexico - which accounts for a quarter of total US oil output. In addition, some 735 oil and natural gas rigs and platforms remained evacuated, according to the federal Minerals Management Service.
In a message of condolence to the US government and Americans, the Organization of Petroleum Exporting Countries said: “OPEC Member Countries will continue their ongoing efforts to ensure that the oil market is well supplied with the crude oil it requires and stand ready to consider whatever other ways they might be able to assist.”
