Hurricane forecast drives oil prices back up
New York (AFP) May 22, 2006
Oil prices staged a sharp rebound Monday after US experts predicted a packed summer season of Atlantic hurricanes, traders said.
Prices recovered late in the session after dropping to the lowest point for more than a month, mirroring losses across all major commodities.
New York's main contract, light sweet crude for delivery in June, rose 70 cents to close at 69.23 dollars a barrel.
In electronic deals before the US market's official opening, the contract went as low as 67.42 dollars, a level last reached on April 7.
In London, Brent North Sea crude for July delivery added 67 cents to 69.35 dollars a barrel, reversing course from an earlier low of 67.63 dollars.
"It's been a reversal in the dollar's fortune that led to some buying of the oil market. I think that oil has been dramatically influenced by what has been happening with the other commodities," Alaron Trading analyst Phil Flynn said.
"The people who sold the oil market because of fears of inflation are now buying it back in anticipation of strong demand and an active hurricane season," he said.
As many as 10 Atlantic hurricanes could form in coming months, and up to four of them could hit the United States, the US National Weather Service said in a report released Monday.
The report said the six-month Atlantic hurricane season, which starts on June 1, is unlikely to reach the records set last year, when there were 28 tropical storms, 15 of which strengthened into hurricanes.
Seven of the hurricanes were considered "major", and four of those slammed into the US coast.
But Robert Latham, who heads the Mississippi Emergency Management Agency, said a hurricane more devastating than Katrina, which killed over 1,500 people in New Orleans and along the US Gulf Coast last year, could not be ruled out.
"As bad as Katrina was, it could be worse," he said.
Katrina and a follow-up hurricane called Rita ravaged US oil facilities along the coast and in the Gulf of Mexico, sending crude futures to then-record highs.
Oil prices had been falling in recent sessions as signs of strengthening inflation in the United States reinforced fears of an economic slowdown caused in part by surging energy prices.
Metals prices, notably gold and copper, have tumbled over the past week on profit-taking, with investors concerned that higher inflation will cool demand for commodities.
The retreat came after the New York contract achieved a fresh record high of 75.35 dollars a barrel on April 21.
"The current weakness in commodities has been triggered by inflation concerns, but also the market was well overdue a correction anyway after such strong gains," Sucden oil analysts said earlier as oil prices were falling.
Set against the fears of inflation are concerns about disruptions to oil supplies from Iran, which is locked in dispute with the United States and European powers over its nuclear ambitions.
"This Iran situation is far from over," said Tony Nunan, a Tokyo-based energy risk manager for Mitsubishi Corp.
Iran's hardline government said Monday it would not negotiate on its uranium enrichment programme, and vowed to continue to work towards an industrial-scale capacity.
Britain, France and Germany have drawn up a package aimed at persuading Iran to end its uranium enrichment, which Washington and its allies say hides an effort to build a nuclear bomb. Iran says it only wants to make reactor fuel.
China reaches milestone with completion of Three Gorges dam
Beijing (AFP) May 20, 2006
After 13 years of immense physical effort and technical ingenuity, China Saturday put the finishing touches to its controversial Three Gorges dam, the world's largest hydropower project.
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