Hurricane fears raise oil prices

August 28, 2008

, MIAMI, August 28 – Oil prices have risen for a fourth straight day on fears that Tropical Storm Gustav may disrupt US production in the Gulf of Mexico.

With Gustav now heading towards Jamaica after battering Haiti on Wednesday, US light crude was up 74 cents to $118.89 a barrel in Thursday trading.

Gustav is on course to hit the US coast by Monday, and there are fears it may be strengthening into a hurricane.

London\’s Brent crude was up 71 cents to $116.93 a barrel.

With 85% of US offshore oil and gas production at risk of being affected, analysts predict that oil prices will rise further until Gustav has run its course.

UK oil giant Shell has already started to remove staff from its offshore facilities in the Gulf of Mexico.

"It looks as though the hurricane is on track to inflicting damage," said Ken Hasegawa, an analyst at broker Newedge in Tokyo.

Fellow oil analyst, Peter McGuire of Commodities Warrants Australia, predicted that the impact of Gustav could lead to oil prices returning above $130 a barrel, a price last seen in July.

"Oil markets are waiting for Gustav," said PetroMatrix analyst Olivier Jakob.

"It is still potentially going towards the oil assets of the US Gulf but current forecasts are not showing it to be the mother of all hurricanes."

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