Storm pushes up oil prices

 

Oil futures rose more than a dollar this morning, with Brent climbing above $115 per barrel, on supply worries as Tropical Storm Isaac threatened to interrupt most US offshore oil production in the Gulf of Mexico.

Oil prices received a further shot in the arm from hopes of more US stimulus measures, which would boost the outlook for demand from the world's top consumer of oil.

Brent crude futures rose $1.31 to $114.90 a barrel early this morning, after rising to a high of $115.50 earlier in the session. US crude was up $1.06 to $97.21.

"The storm will have a temporary impact on prices. But everyone is waiting for the European Central Bank and US Federal Reserve meetings ahead," said Tony Nunan, a risk manager at Mitsubishi Corp in Tokyo.

"Technically, Brent has been strong, so it looks like it's continuing that trend after the temporary blip on Friday and simply reversing the falls."

Oil prices fell on Friday after a report that the International Energy Agency is likely to tap strategic oil reserves as soon as September, dropping its resistance to a US-led plan.

But prices are now turning upwards ahead of the annual US Jackson Hole meeting of central bankers and economists later this week, where Fed Chairman Ben Bernanke will deliver a speech that will be scoured for clues on a third round of quantitative easing.

The markets will also look for policy signals from the euro zone ahead of a September 6 meeting of the European Central Bank.

"The markets are now getting excited on the possibility of additional monetary stimulus by the Federal Reserve," said Ben Le Brun, a Sydney-based market analyst at OptionsXpress.

Reuters