UPI Energy Watch

Oil prices near $120 on storm fears

Crude oil prices and natural gas prices continued rising as weather predictions suggested Tropical Storm Gustav could hit the Gulf of Mexico and disrupt oil and gas production over the holiday weekend.

BP announced Wednesday it was evacuating non-essential workers from its rigs in the Gulf of Mexico, just a day after Royal Dutch Shell made the same announcement.

The latest projections suggest Gustav will outdo Eduardo and Fay to become the most powerful storm in three years, The Financial Times reported.

If Gustav follows the same path as Hurricanes Katrina and Rita did three years ago, it could cost the United States $100 billion and significantly cut oil production.

Oil prices jumped slightly when the other two summer storms blew through, but with unfounded concern and no real disruptions, prices fell back.

Prices had fallen over several weeks until last week when the Baku-Tbilisi-Ceyhan pipeline was disrupted in the Russian-Georgian tensions.

In early July oil was nearing $150 per barrel. Then, on a strengthening U.S. dollar and slowing demand, the price fell back below $110. Now, over the last two weeks, prices have worked their way back up.

Now analysts say they foresee a continuing increase in prices, possibly back up past $122 per barrel.

Bahrain's oil refinery output up 4 percent

According to Bahrain's National Oil and Gas Authority, the nation's oil refinery output and natural gas production have increased significantly over the first half of the year, the Tehran Times reported.

Oil climbed to a record 271,000 barrels per day as the quantity of crude oil imported from Saudi Arabia increased by 6.1 percent, said Oil Minister and NOGA chairman Abdulhussain Mirza.

Economic development in the Persian Gulf island nation drove up domestic demand by 9.4 percent, which also played a role in the increased production. New urban landmark projects, highways, bridges and more cars on the road increased oil demand and byproduct demand as well.

Bahrain's output of gas increased by 10.6 percent to reach 258.227 billion square feet per day.

NOGA said most of the gas output was consumed domestically, but some was injected into Bahrain's oil fields to boost production.

New oil and gas found in Indonesia

Geologists in eastern Indonesia announced they have discovered at least 20 new oil and gas basins, Chinese news agency Xinhua reported.

The country has 67 oil and gas basins, according to Ridwan Djamaludin, secretary-general of the Indonesian Geologists' Association.

Existing mapping is from 1985, and Djamaludin said they are working to update those maps so they can be used by oil and gas companies and the government before planning exploration or drilling.

Indonesia has developed 17 of its existing basins, which are in production phases, and there are an additional 33 basins that are in the exploration phase.

Indonesia is currently the largest oil-producing country in Southeast Asia, producing about 970 million barrels per day.

--

Closing oil prices, Aug. 28, 3 p.m., London

Brent crude oil: $113.66

West Texas Intermediate crude oil: $117.31

--

(e-mail: energy@upi.com)