The price of a barrel of US light crude leapt to $70.80 in overnight trading as oil companies scrambled to move personnel from offshore rigs and platforms. Reports that the hurricane had weakened caused oil to pull back from its early gains to end at $67.20, up $1.07 on Friday’s close.

A statement by the US Department of Energy that it was prepared to open up its Strategic Petroleum Reserve also helped to calm fears of a supply shortage.

The alarm in the crude futures market prompted Opec to propose an increase in its output quota of 500,000 barrels per day (bpd). Sheikh Ahmad al-Fahd al-Sabah, Opec’s president, said he would propose the quota increase at the cartel’s next meeting, on September 19. His promise is unlikely to impress oil traders who are concerned by short-term disruption issues as Opec is already pumping two million bpd above its official quota of 28 million bpd.

By noon on Sunday most offshore facilities in the eastern Gulf had been evacuated and eight refineries, accounting for 9 per cent of America’s petrol output, had been shut down in anticipation of flooding. Fears of a supply shortfall prompted the government announcement that it would consider lending crude from its emergency stockpile. Last year the Government contributed 5.4 million barrels from the stockpile after Hurricane Ivan. Oil from offshore platforms in the Gulf of Mexico represents about a quarter of America’s output and half of that contribution was lost yesterday. Shell had moved more than 900 personnel yesterday. The company is losing 420,000 bpd.

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