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Now a category 5 hurricane, Katrina is moving slowly into an area central to oil and gas production -- and oil companies have begun evacuating production sites throughout the Gulf of Mexico and the southern United States.
Fears of the potential effects of the hurricane were largely behind the price spike that has seen oil go about $US67 a barrel, but some of that pressure fell off after it appeared the hurricane would miss major production facilities.
That is no longer the case.
The Gulf of Mexico produces between 20% and 25% of oil consumed in the US.
"President Bush could announce a release of supply from the Strategic Petroleum Reserve," said commodity strategist David Thurtell of Commonwealth Bank of Australia in Sydney. "(That's) the only thing that will prevent further significant price rises from here."
The Bush administration has said the petroleum reserves should be tapped only when there are disruptions of oil imports from overseas.
Opec's president has said he will ask for the cartel to raise its output as oil prices surged to new records as Hurricane Katrina hit US production.
Opec head Sheikh Ahmad al-Fahd al-Sabah vowed to call for a 500,000 barrels a day rise in output at its next meeting.
The move was a bid to calm supply fears which have risen as the hurricane shut down production in the Gulf of Mexico.