NEW YORK - Oil firmed over $69 a barrel on Thursday as the United States scrambled to replace fuel supplies lost when Hurricane Katrina slammed into Gulf of Mexico rigs and refineries.
President George W. Bush told Americans he expected close ally Saudi Arabia to do "everything it can" to provide the United States with more oil and said there would be zero tolerance of price gouging at the gasoline pump.
The government also temporarily eased environmental gasoline and diesel regulations and waived a shipping law to allow foreign tankers to move fuel between US ports to avert a widely feared crunch in stockpiles.
US crude gained 53 cents to $69.47 a barrel, below the record $70.85 hit on Tuesday on the New York Mercantile Exchange. London Brent crude was up 70 cents at $67.72 a barrel on the International Petroleum Exchange.
NYMEX gasoline futures continued their relentless rise, settling up 15.37 cents at $2.409 a gallon.
The US holds plenty of crude in its strategic stockpile and has offered to loan some of it to refiners, but the gesture does nothing to address an immediate shortage of gasoline, traders said.
European operators dashed to charter ships to send gasoline to the US coast.
"In short, the US is facing a major gasoline crisis and is starting from a nearly empty tank," said a Barclays Capital report.
The European Commission said it wanted to revive a plan to coordinate EU oil stocks and France announced it would give financial aid to millions of families to help them cope with sky-high oil prices.
"We have entered the post-oil era," Prime Minister Dominique de Villepin told a news conference.
The European Central Bank raised its inflation forecasts for this year and next due to oil's spike and raised its projection for crude prices by $12 to $62.80 a barrel in 2006.
"We really need to see signs of slowing demand from China, India and the United States before prices can come off appreciably," analysts at Refco said.
GASOLINE
The US oil industry remained shaken after Hurricane Katrina, with most offshore production from the Gulf of Mexico down, about 10 percent of US refining capacity paralyzed, and pipelines struggling to restart. At least 20 rigs or platforms were adrift, listing, sunk or missing.
The US Department of Energy said some of the eight refineries shut by Katrina could take months to restart, with reports that floodwaters swamped at least three in Louisiana.
European operators have booked 20 gasoline cargoes to the United States since Monday to take advantage of red hot US gasoline prices, brokers said on Thursday.
The United States government issued temporary waivers lifting environmental fuel regulations and allowing foreign tankers to move fuel between US ports to help ease the supply and distribution crunch.
"Crazy gas (gasoline) prices are certainly reflecting a perception of tighter supply in that product," said Bob Frye, a trader at Access Futures and Options Trading.
"As soon as we start hearing about isolated pockets where gas is unavailable, the emotional response is likely to drive things higher."
Further potential supply disruption could come from Nigeria, where the main workers' union threatened a strike, saying proposed fuel price hikes by the government of the world's eighth-biggest crude exporter were unacceptable.
REUTERS NEWS SERVICE
