Oil rises over $1 on Gulf of Mexico storm threat
Oil rose more than $1 to top $115 a barrel on Monday, as investors eyed a potential supply threat from Tropical storm Fay to oil and gas production in the Gulf of Mexico.
FTSE down on U.S. growth fearsBut analysts said a rising U.S. dollar and news that Russia would begin withdrawing its troops from Georgia, a key supply route from the Caspian to Europe, could potentially limit oil's gains.
U.S. light crude for September delivery was up $1.30 to $115.04 a barrel by 8:14 a.m. British time. The contract settled down $1.24 at $113.77 a barrel on Friday, after dipping to $111.34, the lowest level since May 1.
London Brent crude for October rose $1.38 to $113.93.
"The storm threat is the main driver here," said Gerard Burg, a commodities analyst at the National Bank of Australia in Melbourne.
"Oil prices also fell to the lower end of the recent trading range on Friday, so some traders in the market probably saw that as a buying opportunity."
Royal Dutch Shell and Marathon Oil Corp have pulled non-essential workers from the eastern and central Gulf of Mexico due to the storm threat, but offshore production was unaffected, the companies said on Sunday.
On Sunday local time, Fay was expected to avoid most of the offshore production areas in the Gulf and instead strike the Gulf Coast of Florida on Tuesday or Wednesday, the U.S. National Hurricane Centre forecast.
Some computer models, however, predict Fay may enter eastern Gulf of production areas before making landfall on the coast of Alabama or Mississippi.
Fay is the third storm of the 2008 Atlantic hurricane season to threaten U.S. offshore oil and natural gas production.
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