Oil prices have been on the increase again as Tropical Storm Emily heads for the Gulf of Mexico in the US. The region was hit by Hurricane Dennis last week. It is known to have damaged a BP deepwater platform which was still under construction.
Production in the Gulf of Mexico was reduced by more than half as rigs were closed down and evacuated. At the same time the International Energy Agency, a group that advises 26 oil-consuming countries, has said oil demand is set to accelerate next year. The Paris-based energy watchdog believes consumption will increase by 2.1% to 85.6 million barrels a day.
BP’s Chief Executive John Browne said prices will depend on the speed with which production is developed: “The demand, I expect, will continue to rise. Obviously there will be blips as we go through cycles on, say, a 10 year basis. Production is being developed at the moment and that will come through. But there is quite a lag between deciding to increase capacity and it happening.”
The International Energy Agency said growth in demand in China will rebound in 2006, though for this year it has revised its estimates downwards for the US and China, the world’s two biggest energy consumers. The soaring demand in those two countries has reduced spare capacity in most oil-producing nations and increased concern about potential shortages in the event of disruptions. The cost of oil is up by 54% from a year ago. Late on Wednesday US light sweet crude was close to sixty and a half dollars a barrel and Brent around fifty eight and a half dollars