- LONDON (Reuters) - Oil prices
surged to a record above $70 a barrel on Monday as one of the biggest hurricanes
in U.S. history disrupted oil and gas production in the Gulf of Mexico.
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- The region is home to a quarter of total U.S. oil and
gas production.
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- U.S. crude oil futures jumped nearly $5 a barrel in electronic
trade to touch a peak of $70.80 a barrel, the highest front-month price
since the New York Mercantile Exchange (NYMEX) began trading the contracts
in 1983.
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- Oil traded up $2.37 a barrel at $68.55 at 1447 GMT, trimming
early gains after Hurricane Katrina slammed into Louisiana and Mississippi
as a powerful Category 4 storm on the five-step Saffir-Simpson scale.
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- Katrina threatens lasting damage to vital U.S. oil and
refining assets, further straining an industry that has struggled to keep
up with two years of rapidly rising oil demand.
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- "The impact on the market is fairly traumatic,"
said Frederic Lasserre of SG Commodities. "The forecasters were right
about this being an active storm season. We're having more hurricanes in
a market that is already tight."
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- Lasserre said the market would assume a similar impact
to that of Hurricane Ivan last September, which wiped out a total of around
45 million barrels of U.S. oil output over six months.
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- The impact of lost production and imports on U.S. crude
stocks would likely support prices for some time, he said.
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- "The price floor for the market will be higher than
it was before Katrina," Lasserre said.
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- More than half 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.
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- The full extent of the damage and how long it will affect
supplies will only be known after the storm clears.
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