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Monday, 15 September 2008

Reuters, New York,Sep- Oil inched higher on Friday as Hurricane Ike neared the Texas Coast, shuttering a quarter of US crude oil and refinery production and threatening the nation's energy hub with a 20-foot (six-meter) wall of water.

The gains were tempered by mounting concerns that high energy costs and an economic slowdown were cutting deeply into global fuel demand -- worries that briefly had crude below the $100 mark for the first time since early April.
 
US crude rose 31 cents to settle at $101.18 a barrel, trading from $99.99 to $102.89 per barrel. London Brent fell 6 cents to $97.58 a barrel.
 
"When the range is tight, you can pretty much assume that both buyers and sellers are content with their positions, particularly on a Friday after a fairly precipitous sell-off and while staring down the barrel of a strong hurricane," said Mike Fitzpatrick, vice president at MF Global in New York.
 
Oil prices are down about 30 percent from a peak over $147 a barrel hit in mid-July, pulled lower by softening demand and a recent rebound in the US dollar.
 
The US dollar weakened on Friday due to worry over the future of the Lehman Brothers investment bank and a report showing a second month in a row of declining retail sales.
 
Ike is likely to come ashore late Friday or early Saturday as a Category 3 storm with winds of more than 111 mph (178 kph), according to the National Hurricane Center.
 
Fourteen refineries -- 22 percent of total U.S. refining capacity -- have been shut ahead of Hurricane Ike. Meanwhile, nearly all of the crude oil and natural gas production in the Gulf of Mexico was idled due to the storm.
 
But analysts said the market was mixed over how long the industry would remain hobbled after the storm, particularly after Hurricane Gustav caused only minor damage to oil facilities earlier this month.
 
"After Gustav, there is a lot of skepticism about how much damage might occur from the storm," said Addison Armstrong, analyst at Tradition Energy.
 
Sluggish global demand for fuel has also weighed on oil prices even as the Organization of the Petroleum Exporting Countries decided to cut output this week and the US Department of Energy reported larger than expected draws in crude inventories in the wake of Hurricane Gustav.
 
A report that Saudi Arabia had no plans to cut output, despite OPEC's agreement in Vienna this week to trim supply neutralized much of the bullish effect of the OPEC's announcement that it would cut production.

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