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Katrina helps push oil prices higher

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Katrina helps push oil prices higher

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The president of Opec says he is going to suggest the cartel increases its output limit in a bid to cool prices sent soaring by Hurricane Katrina. Fears the storm will have a lasting impact helped push crude to a new record high of over 70 dollars a barrel. Risk manager Peter Beutel said: “The fact that this happens at a time when the markets are as tight as they are, when they markets are as nervous and jittery as they are, I mean the timing just could not be worse.”

Louisiana’s second only to Texas in terms of US oil production, with 17 refineries churning out 1.5 million barrels of crude a day. That capacity has been scaled back dramatically by Katrina, with petrol prices climbing in their wake. Even if Opec agrees to increase supply it could have little impact, as long-term damage caused by the storm in the Gulf of Mexico oil fields and high demand worldwide will keep prices strong.