Volatile oil price eases after surge

SYDNEY - Oil inched back to around US$67 yesterday after surging 7 per cent as a fresh storm loomed in the Gulf of Mexico, threatening more supply disruptions less than a month after Hurricane Katrina.

Tropical Storm Rita is likely to develop into a hurricane after passing over warm waters, meteorologists say, with some suggesting a 40 per cent chance it could directly affect major energy production areas.

US light crude traded down 38USc at US$67.01 a barrel, barely chipping away at Monday's gains of more than US$4. Light crude hit a record US$70.85 a day after Katrina had struck.

The US oil industry can ill afford another storm. Forecasters say Rita could make landfall this weekend in Texas, home to about a quarter of US refining production.

- BLOOMBERG