Oil prices rose more than $1 (€0.82) a barrel yesterday as Hurricane Rita threatened US Gulf of Mexico facilities, but rising fuel inventories helped to ease the concern of potential supply disruptions from the storm.
US light crude rose $1.15 to $67.35 a barrel. The price was down from an earlier three-week high of $68.27.
Hurricane Rita was heading toward the largest concentration of refineries on the US gulf coast. The storm is forecast to make landfall on Saturday in Texas, home to a quarter of US refinery capacity.
Rita comes just three weeks after Hurricane Katrina hit the cluster of plants near the Louisiana and Mississippi coasts.
"People were worried post Katrina as we have real tight product supply," said Jamal Qureshi, analyst at PFC Energy in Washington.
"Now we have a hurricane heading for the bigger part of the coastal refinery centre, threatening to blow a huge hole in products supply."
US government figures released yesterday showed that US petrol stocks rose by a surprise 3.4 million barrels last week.
Analysts polled by Reuters had expected a fall of 200,000 barrels. They agreed that the figures showed that the industry was capable of bouncing back after a natural disaster.
However, petrol futures rose 7.74 cent to $2.0540 a gallon. Gasoline has risen 15 per cent this week.
Refiners began preparing for Rita's onslaught yesterday.
Oil company Marathon said that it would shut down its 72,000 barrels per day (bpd) Texas city refinery.
Valero said it was reducing rates at its 243,000 bpd Texas city refinery and its 85,000 bpd Houston refinery. BP released non-essential staff from its giant 460,000 bpd Texas city plant.
But despite the rising oil prices and a subsequent worsening of global trade balances, the International Monetary Fund (IMF) believes that world economic expansion remains on track.
The IMF's forecast for global growth of 4.3 per cent this year and next is virtually unchanged from its April forecast.
Announcing the modest reduction in its twice-yearly World Economic Outlook, the IMF said that the impact of recent leaps in the price of oil on growth and inflation had been "surprisingly moderate". - (Reuters, Financial Times Service)
