Oil Rises

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.
TradingEconomics.com, Bloomberg 8/29/2008 6:20:14 AM

Royal Dutch Shell Plc and ConocoPhillips started pulling workers from Gulf of Mexico platforms and cutting production in a region that pumps 26 percent of U.S. oil and 14 percent of gas output. Louisiana officials said they will start evacuating residents today in two counties around New Orleans that house refineries owned by Exxon Mobil Corp. and Valero Energy Corp.

Crude oil for October delivery rose as much as $1.80, or 1.6 percent, to $117.39 a barrel on the New York Mercantile Exchange. It was at $117.34 a barrel at 1:31 p.m. London time. Prices are up 2 percent this week, the biggest gain since the week of July 4.

Natural gas for October delivery rose as much as 20 cents, or 2.5 percent, to $8.250 per million British thermal units on Nymex. It was at $8.232 per million Btus at 1:32 p.m. London time.

Gulf of Mexico platforms produced 1.3 million barrels of oil and 7 billion cubic feet of gas a day in June, according to the Minerals Management Service. U.S. states on the Gulf, including Louisiana and Texas, contain 56 operable refineries that account for about 47 percent of U.S. refining capacity, according to information on the Web site of the Energy Information Administration.

Prices were also backed by concerns over increasing tensions between Russia and the West. Russia may curb oil shipments to Western Europe in retaliation for the threat of European Union sanctions and NATO's naval actions in the Black Sea, the Daily Telegraph reported, without citing anyone.

Russian oil companies were ordered by the government to cut supplies to Germany and Poland through the Druzhba pipeline, and executives from OAO Lukoil have been put on alert for the weekend, the London-based newspaper reported.

Supplies may be cut as early as Sept. 1, the newspaper said, citing an unidentified business person. The cut would come at the same time as an emergency EU summit in Brussels to discuss sanctions against Russia, the newspaper said.