Gustav is expected to return to hurricane status before reaching Gulf platforms, according to Jim Rouiller, a senior energy meteorologist with Planalytics Inc., a forecaster based in Pennsylvania.
Crude oil for October delivery rose as much as $1.61, or 1.4 percent, to $117.88 a barrel on the New York Mercantile Exchange. It was trading at $117.36 at 12:03 p.m. London time. Prices are up 63 percent from a year ago.
Futures have dropped 21 percent from a record $147.27 a barrel reached on July 11. Yesterday, oil rose $1.16, or 1 percent, to settle at $116.27 a barrel.
The dollar fell from a six-month high against the euro, bolstering the appeal of commodities as a hedge. The dollar declined to $1.4768 per euro at 11:52 a.m. in London from $1.4653 in New York yesterday, when it touched $1.4571, the strongest since Feb. 14.
Offshore fields in the Gulf of Mexico accounted for 26 percent of total U.S. crude production and 11 percent of natural gas output in April, according to data on the Web site of the government's Energy Information Administration.
Brent crude oil for October settlement rose as much as $1.35 cents, or 1.2 percent, to $115.98 a barrel on London's ICE Futures Europe exchange. It was at $115.70 a barrel at 11:53 a.m. London time.