As well, Wednesday's OPEC meeting in Vienna agreed to raise formal output limits by one million barrels of oil per day, or 4%, to 27 million bopd from November 1.
Reuters reported that Ivan's menacing presence first helped push oil prices up by over 60 cents a barrel, though prices later fell as Ivan, one of the strongest storms on record, cut the demand for crude oil by shutting nearly 13% of US refining capacity.
Refiners fully shut eight refineries in Louisiana and Texas and partially shut four more as they prepared for the storm to hit land early Thursday (US time). Over 3000 workers were evacuated from offshore and onshore rigs and refineries.
Shell Oil closed nearly 450,000 bopd of oil output in the gulf, while ChevronTexaco, ExxonMobil, ConocoPhillips, and Murphy Oil also shut some production. Refineries in Louisiana and Mississippi were closed as a precaution against the storm, the largest being ChevronTexaco's plant in Pascagoula, Mississippi.
Refined product prices may also soon rise as government data shows crude stockpiles last week fell to their lowest level in six months as Ivan delayed shipments.
US light crude settled 81 cents lower at US$43.58 per barrel on the New York Mercantile Exchange, after touching a two-week peak of US$45.30 earlier in the week as news of the tighter crude supply picture overrode OPEC's attempt to calm the market with its hike of official output quota. North Sea Brent crude settled 12 cents stronger at US$41.85 on the International Petroleum Exchange in London.
"The market seems to be following standard hurricane drill in which you price in gains several days in advance and then prices ease when the storm hits," Reuters quoted IFR Energy Services analyst Tim Evans as saying.
The US Energy Information Administration said the effects of hurricanes on American crude supplies could be short-lived, citing Tropical Storm Isadore and Hurricane Lili that hit the gulf in September 2002. Then oil inventories plummeted by 14.7 million barrels over two weeks but rose by 15.7 million barrels during the next fortnight.
However, Energy Merchant trader Ed Silliere said the big concern was the potential for refinery flooding and other damage that might have longer-term impacts on production.
Meanwhile, in Vienna OPEC made no change to its US$22-28 price target and its quota hike underlines its intent to bring crude prices back below at least the US$40 per barrel level.
Saudi Oil Minister Ali al-Naimi reiterated that current prices were too high but said there was no sign that high prices were hurting demand.
However, an extra one million bopd will do little to change real supplies as OPEC is already pumping some two million bopd over the existing 26 million bopd limit.
Oil prices have remained stubbornly high despite OPEC lifting supplies this summer to a 25-year high to meet strong world demand growth led by China's booming economy.
There was also another sabotage attack on a pipeline in northern Iraq that halted crude exports to the Turkish Mediterranean port of Ceyhan.
Saboteurs blew up an oil pipeline, knocking out the 200,000-300,000 bopd of exports from the northern Kirkuk oil fields.
Ivan's top sustained winds were about 220 km/h and peaked at 265km/h during its passage through the Caribbean. Forecasters say it is the sixth-strongest Atlantic hurricane on record and expect it to be at least a Category 3 storm when it reaches shore. It is the third hurricane strike for Florida in just over a month.
