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. Last Updated: 07/27/2016

Oil Prices Climb on Fears of Hurricane's Effects on Supply

VIENNA -- Hurricane Katrina sent oil futures up by more than $1 a barrel Tuesday, as the storm slowed and traders awaited damage reports from U.S. oil and gas refineries in the Gulf of Mexico. Analysts said that even if Katrina did less harm than feared, its effects were bound to tighten the availability of already scarce refined products, thereby driving prices up further.

Gasoline and heating oil, which hit new closing highs on the New York Mercantile Exchange on Monday, continued their climb. A gallon (3.8 liters) of unleaded gas was fetching $2.1430 by afternoon in Europe, up by more than 8 cents. Light sweet crude for October was at $68.60 per barrel, up $1.40, on the Nymex. On London's International Petroleum Exchange, October Brent spiked $1.84 to close at $66.71 a barrel.

On Monday, Nymex futures jumped to an intraday record of $70.80 on signs that Katrina would barrel into the U.S. refineries that account for one-third of U.S. crude and one-quarter of its natural gas supplies. Prices fell back to close at $67.20 on reports that the government might release crude from the U.S. Strategic Petroleum Reserve.

But some analysts on Tuesday brushed aside such a move. "The release of crude out of the Strategic Petroleum Reserve is not as critical as making sure that there is enough refined product supply and that there are refineries to process the crude," said analyst Victor Shum from Texas-based Purvin & Gertz.

Katrina was blamed for the evacuation of more than 700 offshore platforms and rigs. The U.S. Minerals Management Service said Monday that 92 percent of the region's oil output was shut-in, or had already been shut down, with more than 3 million barrels of production lost so far since Friday.