Oil prices rise on new storm fear

Monday, 17 October 2005, 19:56 GMT 20:56 UK

Oil prices rose by nearly 3% a barrel on Monday, as dealers grew nervous about the possibility of another storm hitting output in the Gulf of Mexico.

Tropical Storm Wilma, caused by a depression in the Caribbean, could move into the Gulf by Friday, said the US National Hurricane Center.

It comes in the wake of hurricanes Rita and Katrina, which shut US oil facilities. Six remain closed.
US crude was up $1.73 at $64.36 and Brent crude up $1.09 at $60.57.

However, prices are still off the August highs of above $70 a barrel.

Iran concern

A heightening of tension in Iran - the fourth-biggest global producer - also buoyed prices after bombings in the oil city of Ahvaz.

The latest storm is predicted to move toward the Yucatan peninsula in Mexico on Thursday, then reach the Gulf at the end of the week.

"In the present situation, this storm is bound to keep the market on edge," said Kevin Norrish, an analyst at Barclays Capital.

He said prices of gasoline and heating oil would be particularly sensitive if the storm hit.

In the meantime, US gasoline prices fell again last week, with the cost of regular unleaded down 12.3 cents to $2.73 a gallon, according to the US Energy Information Administration's weekly report.

The national pump price has fallen 20 cents in the last two weeks, but is still up 69 cents from a year ago, it said.
Meanwhile, Opec, whose member nations are already producing at the maximum of their capacity, revised down its 2005 forecast for growth in world oil demand by 200,000 barrels per day to 1.2 million bpd.