Barge explosion sends oil prices up further

A barge carrying 100,000 barrels of petrol exploded near Staten Island yesterday, sending clouds of black smoke into the New York sky and ripples of fear across an already-jittery city.

One man died but officials said the explosion appeared to have been an accident. However, it added to the tense atmosphere following the "orange" terror alert issued by the government a week ago. US stocks fell immediately after the fire broke out, and US crude oil futures briefly rose by more than $1 (€0.93) a barrel.

ExxonMobil said the fire occurred near its Port Mobil distribution terminal on Staten Island. The barge was transferring several hundred gallons of petrol when the explosion occurred.

The FBI said no indication that the explosion was the work of terrorists had been found, though its terrorism task-force was on the scene.

The blast came after a tense few weeks that saw Americans scrambling for duct tape and bottled water as a guard against potential attack. These fears had abated after Mr Tom Ridge, US Secretary of Homeland Security, suggested this week that the alert could be lowered.

Tragedies in nightclubs in Chicago and Rhode Island this week have added to feelings of vulnerability. And in New York, pictures of the arson in a South Korean subway train heightened anxieties.

Investors, already on edge about possible war with Iraq and terrorism concerns, sold shares on news of the fire. But US stocks moved higher after the initial 80-point drop, with the Dow Jones Industrial Average rising 74.51 points to 7,989.47 by midday. The price of oil, already rising, was up 73 cents, or 2.1 per cent, to $35.47 a barrel at midday.

A man's body was pulled from the water three hours after the fire started, another worker was unaccounted for and a third person suffered third-degree burns and was in a critical condition, according to Mr Michael Bloomberg, the city's mayor.

ExxonMobil said a contract firm, Clean Harbors, had been mobilised to the scene for environmental clean-up. "Clean Harbors will begin work after the fire has been extinguished and the authorities give authorisation."

The barge sank soon after the explosion and Bloomberg said officials were unsure how much of the gasoline had burned and how much was still in the vessel.

Fire Department spokesman Mr Michael Loughran said the fire had quickly burned itself out without spreading to any of the major storage tanks at the plant.