MercoPress. South Atlantic News Agency

Soaring oil prices may top US$61 a barrel

Crude oil futures shot up nearly US$2 to target US$61 a barrel yesterday, as another storm inflamed fears of more supply snags in the Gulf of Mexico and a major oil company reported damage to a platform in the region.

Traders came to work yesterday to find Tropical Depression 5 had strengthened to become Tropical Storm Emily, churning east of the Windward Islands in the Lesser Antilles. The storm could head toward the Gulf coast, home to a large concentration of US refining and production facilities, by late this week, forecasters said.

Also, an oil and natural gas platform operated by BP PLC in the Gulf was found to have sustained serious damage (photo) that could cut into the company's production for years to come, brokers said yesterday. The platform was set to begin producing in the fourth quarter.

BP confirmed the Thunder Horse deepwater platform, located 240 kilometres southeast of New Orleans, was listing by as much as 30 degrees Monday, but said the cause of the problem was unknown.

Traders said the news alarmed a market already keyed up about supply disruptions in the wake of last weekend's Hurricane Dennis.

Benchmark light, sweet crude futures for August rose as much as US$1.93 to US$60.85 a barrel shortly after trading began on the New York Mercantile Exchange. The contract ended overnight trading at US$59.76 a barrel.

In London, Brent blend crude futures for August rose as much as US$1.76 to US$59.20 a barrel on the International Petroleum Exchange.

The rally, which rode hefty gains in gasoline and heating oil futures, brought an end to three consecutive days of losses on the energy complex.

??I think the selling has been aberrational in the last few days,'' said Scott Meyers, senior trading analyst for New York brokerage Pioneer Futures Inc. ??Any pullback is going to be a buying opportunity.''

By Saturday, forecasters expect Tropical Storm Emily to reach hurricane force, passing north of Cuba. After that, the storm could head for the Gulf or South Florida, they said.

??Emily continues intensifying as she approaches the eastern Caribbean this morning,'' said Jim Roullier, a meteorologist at Planalytics, a forecaster in Wayne, Pennsylvania. ??Emily has the potential to become a major hurricane by this weekend and may go on to threaten the Gulf and Southeast early next week.''

The storm also could fall apart, forecasters said. But traders were loath to relax after last weekend's near-miss with Hurricane Dennis and expectations of a sharp draw in crude stocks this week. (Agencies)