Oil prices scrambled back towards their fresh high above $70 on Wednesday as dealers feared a sharp squeeze on fuel supplies after Hurricane Katrina shut down vital US Gulf Coast refineries and offshore production platforms.
Katrina, one of the most powerful hurricanes in US history, forced operators to close more than a tenth of the country's refining capacity and a quarter of its oil output, spurring a frenzied spike in gasoline and heating oil prices to new highs.
US crude rallied to a record $70.85 a barrel yesterday before closing lower. It was trading up 61 cents at $70.42 today as a mixed outlook emerged from the various companies making preliminary damage assessments after Katrina.
Prices may rally further if the storm - which is feared to have killed hundreds along the coast - leaves permanent damage.
It took half a year to fully restore output after last September's weaker Hurricane Ivan, which followed a similar path.