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Old September 13th, 2007, 07:52 PM  
Hauptmann Kauffman
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Default Oil prices hit record $80 a barrel

Oil prices have hit an all-time high of over $80 a barrel for the first time after US refiners reported production problems in the wake of Hurricane Humberto.

The hurricane caused a power failure on Thursday forcing the closure of some refiners, mainly in Texas, stoking supply concerns amid falling inventories in the world's top consumer.

The refiners which had to shut down included Total, Conoco and Shell, all in Port Arthur, Texas.

Exxon Mobil said its 350,000 barrel-per-day refinery in Beaumont, Texas, suffered a minor production outage but remained up and running.

Eric Wittenauer, an analyst at AG Edwards in St Louis, Missouri: "Strength today came from gasoline, after some refineries were shut because of storm-related problems."

While Humberto later lost strength and was downgraded to a tropical storm, another tropical system is gaining strength in the Atlantic.

Traders appear more concerned about this Atlantic storm, which the National Hurricane Centre is calling Tropical Depression Eight.

While the storm's course is unclear, energy investors are concerned that tropical storms or hurricane can threaten the oil and gas infrastructure in the Gulf of Mexico.

Though oil prices have quadrupled since 2002, when adjusted for inflation the price is below the $90-a-barrel peaks during the Iranian Revolution in 1979 and the start of the Iran-Iraq war the following year.


The recent price surge has encouraged investors into the oil markets, their enthusiasm growing thanks to a market structure that encourages favorable returns.

Oil first traded over $80 a barrel on Wednesday after the energy department reported declines in crude and gasoline inventories and a drop in refinery activity, but ended the day below that psychologically important mark.

On Thursday, the October contract for light, sweet crude finished at a record $80.09, up 18 cents on the New York Mercantile Exchange and above the previous record close set a day earlier of $79.91.
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