Oil rises to $117 on storm threat to US output
Oil rose by more than $2 above $117 a barrel today, as Tropical Storm Gustav was poised to enter the Gulf of Mexico, raising concerns about its impact on US offshore oil and gas output.
Energy companies braced for Gustav, shutting down production and evacuating personnel from offshore rigs. The US Gulf of Mexico is home to a quarter of US crude oil production and 15 per cent of its natural gas output.
Crude for October delivery rose $2.23 to $117.82 barrel by 1255 GMT, paring Thursday's loss of $2.56 when the authorities pledged to release emergency stockpiles if Gustav disrupts US oil output.
London Brent crude rose $1.93 to $116.10 a barrel.
Tropical Storm Gustav is forecast to strengthen into a hurricane by today or tomorrow as it nears the Gulf of Mexico.
As Gustav churned through the Caribbean, another storm -- Tropical Storm Hanna -- formed in the Atlantic Ocean, on a path that could threaten the Bahamas and Florida, the US National Hurricane Centre said.
Oil received further support as the Daily Telegraph newspaper reported that the Russian government had told at least one of its oil companies to prepare for a possible cut in shipments to Europe in days in response to threatened sanctions, citing a single unidentified source.
Russia's second-largest oil producer LUKOIL denied that and the country's energy minister said Moscow was doing everything it could to ensure stable oil supplies to Europe and to keep its good name as an energy supplier.
Traders are also eyeing an OPEC meeting scheduled for September 9th in Vienna that is expected to review the oil exporting group's output policy.
OPEC could cut output at a meeting in September but will most likely maintain current production levels, Venezuela's Oil Minister Rafael Ramirez said yesterday.