Tuesday, August 30 2005 15:08 Hrs (IST) - World Time -

Singapore: Oil prices were today (Aug 30, 2005) inching higher in Asian electronic trading hours on worries that Hurricane Katrina might have inflicted heavy damage to US crude production facilities, dealers said.

At 9:40 AM (0710 IST), New York's main contract, light sweet crude for delivery in October, was at 68.01 dollars a barrel, up 81 cents from its close of 67.20 dollars in the United States yesterday (Aug 29, 2005).

The contract had struck an all-time high of 70.80 dollars in Asian trading yesterday as the market braced for Katrina's landfall on the Louisiana coast. The monster storm slammed into the Louisiana coast yesterday, hitting on-shore refineries around the deserted city of New Orleans.

In the Gulf of Mexico, which accounts for a quarter of total US oil output, an estimated 92 per cent of crude and 83 per cent of natural gas production was shut down by Katrina, according to government data.

But prices reversed course after the US Department of Energy said it stood ready to act if requested by oil firms to tackle shortages caused by Katrina's impact on Gulf of Mexico rigs and Louisiana refineries.

The market was also calmed somewhat by Saudi Arabia's pledge to raise its production to make up for supply losses caused by Katrina, but dealers said prices are unlikely to recede until the extent of damage is established.

"It's the most sensitive area for US crude supply so the market is certainly going to be on watch to see the implications," said Mark Pervan, a commodities analyst with Daiwa Securities in Melbourne, Australia.