Oil prices climb above $117

August 27, 2008

, LONDON, August 27 – World oil prices rallied on Wednesday as Tropical Storm Gustav remained a threat to US energy installations in the Gulf of Mexico despite being downgraded from hurricane status, analysts said.

The market was meanwhile on tenterhooks ahead of the traditional weekly update on US crude inventories.

New York\’s main contract, light sweet crude for delivery in October, gained 91 cents to 117.18 dollars per barrel in electronic deals.

London\’s Brent North Sea crude for October won 68 cents to 115.31.

Tropical Storm Gustav stalled over Haiti on Wednesday, lashing the impoverished island with heavy rain after striking it with hurricane force and killing five people.

The US National Hurricane Center (NHC) warned that Gustav could regain hurricane strength on Thursday once it moved away from Haiti.

"Oil markets are keeping a nervous eye on … Gustav, with forecasts showing it may move into the Gulf of Mexico," said David Moore, a Sydney-based commodity analyst with Commonwealth Bank of Australia.

The storm was blowing winds of 60 miles per hour (95 kilometres) as it "stalled" over Haiti about 80 miles (125 km) west of Port-au-Prince, the NHC said in its latest report.

Traders were also awaiting data on the health of US energy stockpiles in the United States, the world\’s biggest consumer of oil. Analysts are predicting that crude stockpiles had shot higher in the week ended August 22, while they forecast a drop in motor fuel inventories.

Gustav made landfall in Haiti Tuesday as a Category One hurricane — the lowest on the five-level Saffir-Simpson scale.

At least five people died and seven were injured in southeast Haiti as roofs flew off houses and electricity pylons were ripped away by violent winds, authorities said late Tuesday.

Anglo-Dutch energy giant Royal Dutch Shell said it was planning to evacuate some staff from its Gulf facilities because of Gustav.

Prices were also supported Wednesday by the possibility of heightened tensions between Russia and the West after Moscow recognised the Georgian separatist regions of South Ossetia and Abkhazia as independent.

Traders were meanwhile monitoring fresh violence in key crude producer Nigeria.

Unidentified gunmen kidnapped an Israeli from his residence in Nigeria\’s oil hub of Port Harcourt, police said Wednesday.

"An Israeli national was abducted in the city yesterday (Tuesday). We are still checking the details of the incident," Rivers state police spokeswoman Rita Abbey told AFP.

She said no group had claimed responsibility for the abduction, the latest to hit the restive oil region in recent months.

Latest Articles

Live prices

Stock Market