Oil Rises in New York as Gustav Threatens U.S. Gulf Platforms

Alexander Kwiatkowski and Christian Schmollinger
Bloomberg
Friday, Aug 29, 2008

Crude oil headed for its biggest weekly gain in almost two months and natural gas rose as producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina.

Gustav is expected to reach Louisiana next week, passing through a region home to a quarter of U.S. oil output and 14 percent of natural gas production. Oil prices will rise next week if Gustav strikes the central Gulf Coast, according to median of responses in a Bloomberg News survey of analysts.

``If we see some major disruptions from the hurricane upstream or downstream, we could break through and see prices of $130 next week,'' said Andy Sommer, an HSH Nordbank analyst in Hamburg. ``If there is no disruption, we could come back down to $110 again.''

Crude oil for October delivery rose as much as $1.58, or 1.4 percent, to $117.17 a barrel on the New York Mercantile Exchange. It was at $117.03 a barrel at 8:55 a.m. London time. Prices are up 2 percent this week, the biggest gain since rising 3.6 percent in the week of July 4. Oil has dropped 21 percent from a record $147.27 reached on July 11.

Natural gas for October delivery rose as much as 13.9 cents, or 1.8 percent, to $8.189 per million British thermal units on Nymex. It was at $8.150 per million Btus at 8:57 a.m. London time.

The U.S. will be celebrating the Labor Day holiday on Sept. 1 and floor trading on the Nymex will be closed. Traders will still be able to carry out electronic deals.

Full article here