MercoPress. South Atlantic News Agency

Hurricane Dean targets Mexican oilfields in the Bay of Campeche

Dean smashed up the arty resort of Tulum and washed sand off the famous beach at Cancun before crossing the peninsula and heading out into the southern Gulf of Mexico where state oil company Pemex has hundreds of wells and installations.

Dean eased to a Category 1 hurricane after striking Mexico's Yucatan Peninsula overnight and will probably strengthen by one level before making landfall again, the U.S. National Hurricane Center said. Petroleos Mexicanos, the state oil company, evacuated almost 20,000 offshore workers, shutting 80 percent of the nation's oil output for the next two days. ''Dean has not had an effect on production except for the Mexico output,'' said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp in Tokyo. ''But the market is ignoring the bullish signals and looking at the larger macroeconomic picture.'' Crude oil for October delivery was at $69.66 a barrel, up 9 cents, in after-hours electronic trading on the New York Mercantile Exchange at 1:12 p.m. in Singapore. The contract fell $1.39, or 2 percent, to $69.57 yesterday. September oil expired yesterday, dropping 2.3 percent to $69.47, the lowest close for the front-month contract since June 27. ''Mexican oil refiners and producers are shutting down quite a bit, but that's nothing relative to what goes on along the Gulf coast of Texas and Louisiana,'' said Alex McGarr, commodity broker at Cannon Trading Co. in Beverly Hills, California. ''With all these credit problems there's just less liquidity and there's less buyers out there.'' Dean, with winds near 80 miles an hour, is in the Bay of Campeche and was about 215 miles (344 kilometers) east-northeast of, Veracruz, Mexico, at 10 p.m. Veracruz time, the hurricane center said on its Web site. Dean is moving west-northwest at about 18 miles an hour. The storm may come ashore between the port cities of Tampico and Veracruz, with sustained winds of 96 to 110 miles (154 to 177 kilometers) per hour, the forecaster said. In London, Brent oil for October settlement was at $68.75, up 6 cents, in electronic trading on the ICE futures exchange. It fell $1.16, or 1.7 percent, to $68.69 yesterday, the lowest close since June 8. New York oil prices have dropped 11 percent from the record $78.77 reached on Aug. 1. Prices rose last week as Dean approached the Gulf of Mexico, home to 27 percent of U.S. oil production, and the U.S. Federal Reserve cut lending rates to stabilize equity and credit markets.