Oil gains over $1 as Gustav shuts U.S. output
Oil prices rose more than $1 on Monday after energy firms in the U.S. Gulf shut down nearly all offshore oil output and a host of flood-prone coastal refineries ahead of Hurricane Gustav, the biggest threat since 2005's devastating Katrina.
Dollar hovers near record lowBut prices pared some bigger earlier gains as traders waited to see whether Gustav would leave lasting damage in its wake after it slams into the Louisiana coast later in the day as a major Category 3 hurricane.
U.S. light crude for October delivery rose $1.54 to $117 a barrel by 0714 GMT (8:14 a.m. BST), having briefly surged above $118 a barrel when the New York Mercantile Exchange (NYMEX) opened for electronic trading several hours earlier than usual.
London Brent crude rose $1.45 cents to $115.50.
U.S. RBOB gasoline futures outpaced crude gains to rise 6.78 cents, or 2.38 percent, to $2.922 per U.S. gallon, as traders feared the refining sector could be harder hit.
But oil prices have still barely recovered from last month's over three-month low of nearly $111, with buyers cautious even after the steep slump from mid-July's record high
$147.27.
"This is definitely a dangerous storm but I think most of the market is in a wait-and-see mode, waiting to see (if there are) disruptions to oil facilities and pipeline infrastructure before they make a big move," said Gerard Burg, a commodities analyst at the National Bank of Australia in Melbourne.
"Investors are a lot more cautious now, given the general bearish sentiment in the market."
Energy companies are taking no chances, shutting down more than 96 percent of U.S. Gulf oil production and 82 percent of natural gas output as of Sunday afternoon, the U.S. Minerals Management Service said. The Gulf normally pumps a quarter of all U.S. production and about 15 percent of its domestic natural gas.
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