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London explosions causes oil price plunge Original Source Link: (May no longer be active)
http://www.forbes.com/home/feeds/ap/2005/07/07/ap2127490.htmlhttp://www.forbes.com/home/feeds/ap/2005/07/07/ap2127490.html
Associated Press
Update 11: Oil Prices Plunge Amid London Explosions
07.07.2005, 07:19 AM
Crude oil prices briefly surpassed $62 a barrel Thursday for the first time before turning sharply lower, amid heightened market uncertainty following a string of fatal explosions in the British capital.
Nearly simultaneous blasts rocked the London subway and tore open a packed double-decker bus during the morning rush hour, causing at least two deaths and injuring at least nine riders, police said. They were concerned it was a coordinated attack.
Light, sweet crude for August delivery on the New York Mercantile Exchange fell $1.88 to $59.40 a barrel in electronic trading by midday in Europe. The contract had earlier hit new high of $62.10 a barrel on Thursday, a day after closing at a record settlement price of $61.28 a barrel on the Nymex, where oil has been traded since 1983.
Heating oil fell nearly 5 cents to $1.7467 a gallon while unleaded gasoline was down over 4 cents to US$1.7455.
At London's International Petroleum Exchange, August Brent futures slumped $1.70 to $58.15 a barrel.
"The market is very concerned at the moment, but it's too early to draw any conclusions as we are in the middle of events and no one seems to have a clear idea of what exactly is going on," said Frederic Lasserre, head of commodities research with Paris-based SG Securities.
The events in London turned around the bullish effects of hurricane-related worries from the Gulf of Mexico, with crude prices dropping as much $2.50 in five minutes, Lasserre said.
Worries over possible glitches in the U.S. supply network had sent crude prices to record highs as a string of tropical storms approach the Gulf of Mexico. On Wednesday, storm-related power outages disrupted some oil production and refining operations in the Gulf of Mexico.
The refinery snags caused by Tropical Storm Cindy were minor and temporary, and with petroleum producers preparing for Hurricane Dennis, the flow of oil from the region was reduced by almost 200,000 barrels per day.
Petroleum producers evacuated 85 production platforms and 11 drilling rigs, according to the Minerals Management Service, which said 190,000 barrels per day of oil had been shut-in as a result. That is less than 1 percent of daily demand in the United States.
Traders fear a repeat of last year's Hurricane Ivan, which damaged oil platforms in the Gulf of Mexico and caused others to shut down for months.
Almost 44 million barrels of oil production was lost between September 2004 and February 2005, while natural gas output declined over the same period by 172 billion cubic feet.
Traders said the rally exemplified the energy market's skittishness about any lost output at a time when the global supply cushion is thin.
Crude oil futures are about 60 percent above year ago levels, though still below the inflation-adjusted high above $90 a barrel reached in 1980.
Associated Press Writer Gillian Wong in Singapore contributed to this report.
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