Spiga

Oil leaps above $70 as Katrina rips through US Gulf

U.S. crude oil futures jumped nearly $5 a barrel in opening trade to touch a peak of $70.80 a barrel, surpassing last week's $68 high to the highest frontmonth price since the New York Mercantile Exchange (NYMEX) began trading contracts in 1983.

It later traded up $3.94 a barrel, or 6 percent, to $70.07, more than recouping losses on Friday, when mixed forecasts showed Hurricane Katrina might miss oil and gas infrastructure.

More than 40 percent of all U.S. crude oil production in the Gulf of Mexico was reported closed down due to the hurricane, with the total expected to rise significantly as more operators report affected production to the U.S. government on Monday.

"Last year we had 15 million barrels more gasoline (stocks) than now," said Jim Ritterbusch, president of Ritterbusch and Associates in Illinois. "Given the already low stock levels most of price impact will be at the front of the gasoline curve."

Gulf Coast refiners produce about 45 percent of U.S. gasoline, he said, and they might struggle to restore operations amid power cuts and flooding, even if they escape damage.

IF TRADERS STOPPED SHORTING THIS MARKET IT WILL GO DOWN.... MOST MONEY IS ON THE WRONG SIDE OF THIS TRADE.......... BUT THANKS FOR THE BULL PROFITS CREATED...

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