950804

Oil prices fall as

hurricane veers inland

NEW YORK: Oil prices fell on Thursday as Hurricane Erin moved inland, causing little damage to Louisiana oil facilities along the Gulf of Mexico.

Prices had jumped overnight on worries about the storm.

"The market got excited overnight as the storm was upgraded to a hurricane again, but then some profit taking set in on news it headed inland, avoiding the Louisiana refinery centres," said Jim Fiedler at E.D. & F. Man.

September crude oil lost 6 cents to $17.72 a barrel, down from five-week highs of $18.02 hit overnight on the New York Mercantile Exchange's ACCESS trading system.

Erin sent oil and gas producers running for cover on Thursday, shutting down offshore production facilites and refineries along the Gulf of Mexico but causing little damage.

Exxon, Mobil, Chevron and Shell were among the biggest companies reporting they had evacuated crews and shut down production on rigs dotting the Gulf, a routine safety precaution whenever hurricane warnings go up.

Traders said the key development was the closure late Wednesday of the Louisiana Offshore Oil Port, or LOOP.

The LOOP, a platform terminal 60 miles south of New Orleans, is the only U.S. port in water deep enough to allow giant tankers to unload and is a main gateway for foreign crude oil into the U.S. market.

LOOP operators said unloading of two supertankers was delayed but the terminal would likely reopen late Thursday.

September gasoline lost 0.51 cent to close at 53.93 cents a gallon and heating oil ended down 0.20 cent at 49.24 cents.

Natural gas futures ended slightly higher across the board in a moderate session. September gas closed 1 cent higher at $1.432 per million British thermal units on NYMEX.

With the remnants of Tropical Storm Dean dumping rain in the Midwest and Erin's rains likely to cover the South, most traders agreed that demand for natural gas for cooling will ease from record levels seen during the recent heat wave.

"It's a mixed bag, but the cloud cover is cooling things off. There was so much bullish news in the market and it couldn't get legs," one New York-based futures trader said.

Chicago Board of Trade wheat futures posted mild gains after limit losses a day earlier, as profit-taking abated and Bangladesh surprised the market with a tender for 200,000 metric tons of wheat using U.S. government subsidies.

December wheat rose 3/4 cent to $4.52-1/4 a bushel.

"Wheat closed pretty good. It was important that December closed above $4.50," said Vic Lespinasse of Dean Witter Reynolds.

The National Weather Service's six- to 10-day outlook for possibly above normal temperatures and below normal rains in the Midwest also halted this week's selling spree in soybeans.

November soybeans rose 3 cents at $6.08-1/2 a bushel.

Corn closed slightly higher on the forecast for hotter weather and talk China was continuing to buy U.S. corn despite high prices and political squabbles with the United States.

December corn rose 1/4 cent to $2.78-1/2 a bushel, also on the CBOT.-Reuter