The world's energy markets suffered a fresh bout of jitters yesterday as fears of damage to oil installations in the Gulf of Mexico from Hurricane Katrina kept the price of crude well above $67 a barrel.
Amid fears that damage to rigs could send oil prices spiralling above $70 a barrel over the next few days, futures contracts for oil were close to the record levels of $68 reached on Thursday.
A terrorist attack on a well in Iraq's northern Kirkuk oilfield added to concerns that supplies of oil might not be able to keep up with strong global demand, particularly from the United States and China.
Alan Greenspan, the chairman of the US Federal Reserve, said yesterday that the world's biggest economy had so far emerged relatively unscathed from oil prices more than doubling since 2003.
In remarks to a gathering of central bankers, Mr Greenspan said the "flexibility of our market-driven economy has allowed us, thus far, to weather reasonably well the steep rise in spot and futures prices for crude oil and natural gas that we have experienced over the past two years".
Evidence that higher motoring costs are starting to affect the US economy emerged yesterday with news of a sharp and unexpected drop in consumer confidence. The Michigan University index of sentiment dropped from 96.5 in July to 89.1 in August, prompting analysts to predict slower spending in the second half of the year.
The economic data was published as oil and gas producers in the Gulf of Mexico were braced for rough weather. Hurricane Katrina's projected course runs east of the heart of oil and gas production but at least five companies were battening down the hatches.
The 11th-named storm in the Atlantic hurricane season forced at least four firms to evacuate workers from the Gulf of Mexico, the source of 25% of US oil and gas output.
Tetsu Emori, the chief commodities strategist at Mitsui Bussan Futures in Tokyo, said: "The impact of Katrina is a bit limited now. But there will be more to come."
Oil dealers also focused on Nigeria, an Opec producer where fuel price rises of 40% to 50% yesterday could lead to general strikes, as has happened previously.
The blue-collar union NUPENG said on Thursday it would not halt oil sales from the world's eighth-biggest exporter if it joined any general strike called to protest against the price increase.
