US oil prices rose on Thursday on signs that crude production from the US Gulf of Mexico may be slow to return after back-to-back hurricanes left the region in shambles.
The US Minerals Management Service said Thursday that undersea pipelines carrying oil from deep sea fields to the coast may have taken more damage than first feared, potentially delaying the recovery of a quarter of US output.
Meanwhile, reports of damaged rigs and platforms continued to roll in from operators in the hard-hit gulf, where nearly all crude output and 80 percent of natural gas production remained frozen as of Thursday.
"There is still a lot of concern about how bad the damage is in the Gulf of Mexico. It will be an incredible achievement if we can avoid fuel shortages this winter," said Phil Flynn, analyst at Alaron Trading in Chicago.
US crude on the New York Mercantile Exchange settled up 44 cents to $66.79 a barrel, shrugging a downward move in gasoline prices of 8.77 cents to $2.2516 a gallon. London Brent settled at $63.84, down 9 cents.
Oil prices have been holding firmly over $60 a barrel in recent weeks after hurricanes Katrina and Rita knocked out a huge amount of US refining and crude production.
More than 3 million barrels per day (bpd) of fuel processing capacity remained shut Thursday, and Washington has said that up to 15 percent of US capacity could be out for at least another couple of weeks.
Those outages have sparked fear that retail energy prices may surge ahead of the northern hemisphere winter.
"Keeping crude oil below $70 is all very well, but in political terms it is a useless achievement if you cannot also keep gasoline below $100," said Barclays Capital. "There is an energy crisis, and it is likely to get worse before it gets better."
US government data on Wednesday showed gasoline stocks in the world's biggest consumer rose unexpectedly last week due to strong imports and flagging demand.
But analysts said the numbers did not reflect Hurricane Rita's full impact on fuel production.
Strikes in France, a leading US gasoline supplier, could worsen the problem by hurting Europe's ability to send shipments across the Atlantic. Strikers voted on Wednesday to extend the eight-day strike until Friday.
France's biggest refinery is already closed, and a union is rallying support to spread the strike to oil major Total's other plants, which would put over half the country's gasoline and heating oil output at risk.
French shipping workers also extended a blockade for a third day on Thursday, which has stopped oil tankers from discharging at the Fos-Lavera port near Marseilles.
"In all, the disputes serve as further notice, if needed, that the Atlantic refining system is operating on the edge at the moment," said Barclays Capital.
The United States has been relying heavily on Europe, and France in particular, for fuel supplies in the wake of the two storms' assault on its refineries.