Crude prices fall as Wilma misses USG facilities

Dubai (Platts)--24Oct2005

Global crude prices plummeted Monday as category three Hurricane Wilma
bypassed US Gulf of Mexico crude production facilities on the way towards the
southwestern coast of Florida after battering Mexico's Yucatan Peninsula over
the weekend.

     The New York Mercantile Exchange's December WTI contract dropped
$1.13/bbl to $59.50/bbl by 1219 GMT in electronic trading from Friday's close,
while the Brent December contract also headed south, falling $1.10/bbl to
$57.38/bbl in early trading. 

     The key support level for Brent was cited at $57.05/bbl, but brokers said
if this level was broken then prices would head lower to around $55.65/bbl.

     Prices moved lower on news that Wilma had bypassed USG output facilities.

     Wilma also bypassed the main Mexican oil fields in the Sound of Campeche
and the country's two main oil ports of Dos Bocas and Cayo Arcas had reopened
to shipping late Sunday after being closed over the weekend by bad weather
whipped up by a seasonal cold front.

     The market shrugged off a labor union's strike in Nigeria that shut down
the Eni-operated Brass River terminal, which handles 300,000 b/d of crude
exports. Nigerian labor unions Monday said exports have resumed.

     And a drop in Iraq's southern production also had seemed to have no
impact on the market. The country's southern output fell to around 850,000 b/d
to 1-mil b/d due to limited storage capacity and poor weather conditions.
Basra Oil Terminal loadings have been halted since Saturday. 

     More reassurance came from the International Energy Agency, which last
Thursday said it would keep available to the market the volumes of crude and
products not taken up from its original offer of 60-mil bbl following the
disruption caused by Hurricane Katrina. 

     Meanwhile, refineries shut by hurricanes Katrina and Rita continue to
make a gradual comeback. Idled capacity had reduced to 1.27-mil b/d as of last
Friday, about 7% of the total US capacity. Power has been restored to all
these refineries in Texas and Louisiana, with most slated to restart over
October and November.

     Offshore output, though, has been slow to recover, with some 987,000 b/d
or 65% of the US Gulf oil output and 5.34 Bcf/day or 53% of gas production
still curtailed after the two hurricanes.

     US government data from last Wednesday showing a 3.2% drop in products
deliveries in the past four weeks from a year earlier and an unexpectedly
large 5.6-mil bbl crude stocks build continue to cast a bearish shadow on the
market.

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