NEW YORK – World oil prices rose on Thursday on worries about oil production shut by Hurricane Ivan and a new storm that could delay imports from entering the Gulf of Mexico.
U.S. light crude settled 30 cents stronger at $43.88 a barrel on the New York Mercantile Exchange (search), while London's Brent crude rose 45 cents to $40.80.
Hurricane Ivan swept east of most oil and gas operations on Thursday, but has so far shut nearly 4 million barrels of crude output from the gulf from Monday through Thursday, according to the federal Minerals Management Service (search).
"There will still be shipping delays, especially with Hurricane Jeanne behind it," Ed Silliere at Energy Merchant LLC (search), said about the new storm, which was not expected to enter the Gulf of Mexico, but could delay imports from coming into it.
"Even though Ivan was not as bad as we thought, it can take a while to bring back up refineries and there could be lingering damage," he said.
Ivan also fully shut eight refineries, or about 13 percent of U.S. refining capacity. On Thursday, only half of those were restarting, and ChevronTexaco's Pascagoula, Miss., 325,000 bpd refinery, the largest fully shut plant, was still outed by a power outage on Thursday.
SG oil economist Deborah White pointed to delays in getting refining capacity back on stream after previous hurricane disruptions.
"If you look back to when Hurricane Lili hit in October 2002 we lost an average 1.1 million barrels per day of crude runs in the week it hit, and the next week we lost half a million bpd," she said.
Traders had been worried that disruptions to U.S. Gulf crude production and refinery operations would hamper supply builds needed to ensure a trouble-free winter.
In its latest inventory snapshot, the Energy Department said on Wednesday commercial crude of 7.1 million barrels, or 2.5 percent last week, taking them to their lowest in six months.
With OPEC (search) states pumping near capacity, crude itself is not in particularly short supply.
But refining capacity is tight, meaning there is fierce competition to buy up supplies of distillate fuels ahead of the Northern Hemisphere winter, and also for the sweet light crudes that are best suited to their production.
Distillate fuel stockpiles, which have hardly grown from year-ago levels, are some way below their five-year average.
Supply security fears, particularly from Iraq where saboteurs have crippled northern exports with a barrage of pipeline attacks, have also encouraged the bulls.
These factors have meant that prices, running about $6 off an all-time peak at $49.40 for U.S. crude hit last month, found little relief from OPEC's Wednesday agreement to increase official output by 4 percent to 27 million bpd.
The cartel is actually already pumping about a million bpd more than that level.