Head news

Oil rises as storm fears grow NEW YORK — Oil rose yesterday on forecasts that Tropical Storm Gustav will intensify into a hurricane as it ploughs towards the US oil and natural gas platforms in the Gulf of Mexico. Further support came from weekly US government inventory data that showed an unexpected drop in crude oil stockpiles in the world’s top consumer. US crude settled up $1.88 at $118.15 a barrel, adding to two days of gains. London Brent crude gained $1.59 to settle at $116.22 a barrel. Storm tracks showed Gustav churning towards the Gulf of Mexico, and forecaster Planalytics said 85 per cent of US oil and natural gas production in the region could be shut in. Companies began pulling workers off rigs as weather models showed Gustav strengthening into a hurricane before it hits the Gulf, which pumps about a quarter of US oil production and 15 per cent of natural gas output. If Gustav hits the Gulf as a Category 3 hurricane it would be the biggest storm to hit the region’s oil infrastructure since hurricanes Katrina and Rita in 2005. “After 2005, when a hurricane blows in, guys tend to prepare for the worst. It’s a situation where simply you don’t want to be the guy caught short, because someone will be,” said Steve Mosby, vice president at ADMO Energy. Analysts said US companies could be forced to draw on oil inventories to make up for disruptions. Data from the US Energy Information Administration showed US crude stocks fell 100,000 barrels last week, against calls for a build. Gasoline stocks fell 1.2 million barrels, less than forecasts for a 2.9 million barrel drawdown. — Reuters