Oil rises as Hurricane Isaac threatens U.S. Gulf Coast

Tue Aug 28, 2012 5:35pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices rose on Tuesday as Hurricane Isaac approached the U.S. Gulf Coast, forcing companies in the region to close down oil production platforms and refineries.

Isaac strengthened into a Category 1 hurricane and was expected to reach the coast of Louisiana late on Tuesday.

More than 90 percent of U.S. Gulf of Mexico oil production was shut on Tuesday, along with 936,000 barrels per day of Gulf Coast refinery capacity.

Late on Tuesday, Group of Seven finance ministers issued a statement saying they were ready to call on the IEA to take appropriate action to ensure the market was fully supplied and that they remain vigilant toward risks to the global economy posed by elevated oil prices.

"The statement from the G7 suggests, in part, that they are also sensitive to price, but if you have to focus on a supply disruption to authorize a release, we have one in the Gulf of Mexico called Isaac that has had a real impact on production," said Jan Stuart, head of energy research at Credit Suisse.

Brent October crude rose 32 cents to settle at $112.58 a barrel, having fallen to $111.71 but finding support ahead of the 200-day moving average of $111.45. Brent's session peak was $113.10.

U.S. October crude gained 86 cents to settle at $96.33 a barrel, after reaching $96.54.

The Gulf Coast refining interruptions pressured crude futures on Monday on expectations that less crude oil will be needed by refineries and that Isaac, a weaker storm than the 2005 category 3 Hurricane Katrina, will do less damage to offshore production.   Continued...