Gasoline prices sharply up on Katrina impact

Oil prices rose sharply again on Tuesday amid continuing uncertainty about how much damage Hurricane Katrina has done to US oil production facilities, although it was known that two offshore drilling rigs had been dislodged from their moorings and were floating free in the Gulf of Mexico, and nine refineries in Louisiana and Mississippi were closed as of Tuesday.

Gasoline prices rose again as well. September contracts for unleaded gasoline on the New York Mercantile Exchange was up to $2.4100 per gallon at one point during the day, which comes out to $101.22 per barrel. By late afternoon, the gasoline futures had scaled back to $2.3900 per gallon, an increase of 31.94 cents for the day.

Heating oil prices were also up substantially in the US, with September futures on Nymex up to $2.0250 per gallon, an jump of 11.62 cents; earlier in the day prices were up to $2.060 per gallon, a new record.

The higher prices have pushed the refiners margin on each barrel refined to more than $20. Analysts have estimated that over 12 percent of the total US refining capacity, or around 2 million barrels per day, has been shut down due to Katrina. About 1.3 million barrels per day of that amount is gasoline refining capacity.

Crude oil prices followed gasoline and distillates prices up. October contracts for West Texas Intermediate crude were up $2.61 to $69.81 per barrel late in the day, after having risen to $70.80 per barrel another new record.

The rise in prices has sent near-term contracts higher than later contracts, a reversal of convention called backwardization.

Meanwhile, Brent crude October contracts rose to $68.89 at one point in the day before backing off to $67.57 late in the day, a rise of $2.70 on the day.

Natural gas prices also rose again, with Henry hub natural gas on Nymex trading at $12 per million British thermal units during the day for the second day in a row.