By Dave Forest
September 27, 2005
Energy investors took a good look at the damage from Hurricane Rita yesterday. And didn’t like what they saw.
The oil price jumped as high as $66.17 as buyers realized that fallout from the storm may be worse than initially thought. ConocoPhillips said that its 239,000 b/d refinery in Lake Charles Louisiana is damaged and without power. The company gave no date for a restart of operations.
Offshore, Chevron reported its Typhoon platform in the deepwater Gulf of Mexico was severed from its moorings. The company said that the platform suffered “severe” damage.
Not all was bad news. Officials at the Louisiana Offshore Oil Port said that the facility could begin operations as early as yesterday afternoon. President Bush also offered some relief to oil markets, saying that the government would release further supplies from the Strategic Petroleum Reserve.
Despite these reassurances, oil is currently sitting at $65.78.
Oil is quickly becoming the focus for precious metals investors too. The gold price has moved more in lockstep with crude over the last weeks than with its traditional dance partner – the US dollar. When the oil price dived on Friday, gold collapsed. But yesterday, with crude rising, the metal jumped $8 to top $467/oz.
Overnight, the gains have been clipped, with gold falling to a current $464.10. Some technical analysts are reporting that things look fairly wide open between $450 and $500 – which seems to be supported by the wild swings seen of late on the trading floor.
Silver, for its part, gained 15 cents on the day to as high as $7.33/oz. Currently, it’s dipped to $7.29. (Click here for charts)
Further proving that gold and the dollar are on a trial separation, the buck held strong yesterday even as the yellow metal was rising. Kansas City Federal Reserve Prez Thomas Hoenig helped things along by noting in a speech that US inflation is “high enough to get your attention,” spurring speculation that the Fed will continue raising interest rates. I think Tom may be understating things a little – in my neighborhood gas stations have run out of signage space for the digits on their unleaded prices.
Currently, the buck is selling for $1.2025. (Click here for currency prices)
That’s what’s happening… until tomorrow!
