Prometheus 6

Crude Oil, Gasoline Surge as Storm Heads for the Gulf of Mexico

Sept. 19 (Bloomberg) -- Crude oil and gasoline jumped, as natural gas surged to an all-time high, on forecasts that Tropical Storm Rita will strengthen into a hurricane and impede efforts to restore production in the Gulf of Mexico.

Rita, which gained strength over the Bahamas, may become a hurricane tonight and approach the Texas coast by Sept. 24. Hurricane Katrina last month caused the shutdown of eight oil refineries and forced at least 10 others to slow processing. Royal Dutch Shell Plc, BP Plc and Chevron Corp. announced they are pulling workers from platforms in the Gulf.

``Evacuations have already started, which is going to disrupt production,'' said Doug Leggate, senior oil analyst at Citigroup Inc. in New York. ``Any storm going through the Gulf is going to slow the pace of the recovery from Katrina.''

Crude oil, natural gas, gasoline and heating oil surged to records after Katrina made landfall. Crude oil touched $67.60 on the New York Mercantile Exchange, the highest since Sept. 2. Natural gas futures reached $12.70, the highest since the contract was introduced in 1990. The previous record of $12.30 was touched on Aug. 31.

The Organization of Petroleum Exporting Countries expects to announce tomorrow an agreement to offer an extra 2 million barrels a day to world markets, which would leave members pumping as much as they can, the group's president said. OPEC, which produces 40 percent of world's oil, is meeting today and tomorrow in Vienna.