Oil hits $70 a barrel

U.S. crude oil prices surged to a new record high above $70 a barrel in opening trade amid concerns about supply shortages caused by coming Hurricane Katrina.

Oil futures on the New York Mercantile Exchange soared to $70.80 a barrel, beating the previous record of $68 set last week, after producers and refiners shut down operations ahead of the Category 5 hurricane.

Katrina, measured as one of the four strongest storms on record, was expected to hit land at sunrise. About 25-30 percent of U.S. oil comes from the area expected to be hit hardest by the storm.

Seven southeast Louisiana refineries with a combined daily capacity of 1.45 million barrels per day (bpd) were shut alongside the Louisiana Offshore Oil Port, a major crude importing facility.

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The Organization of Petroleum Exporting Countries, which has been pumping at its full capacity for nearly a year, expressed deep concerns over the buoyant prices.

"We are becoming increasingly concerned about the continuing high level of oil prices, which does not properly reflect the underlying fundamentals of the market," Kuwaiti Minister of Energy and OPEC President Sheikh Ahmad al-Fahad al-Sabah said in a statement.

He noted that current supply exceeds demand, leading to a buildup in stocks and stocks of crude and distillates are above their seven-year average.