NEW YORK (Reuters) - Oil rose on Monday as Tropical Storm Gustav formed in the Caribbean, stirring concerns that it could disrupt oil and natural gas output in the Gulf of Mexico as it moves northwest.
Gustav, the seventh tropical storm in the Caribbean this season, was expected to strengthen and bring hurricane conditions to parts of the Dominican Republic and Haiti within 24 hours.
U.S. crude settled up 52 cents at $115.11 a barrel after falling more than 5.4 percent on Friday in the largest one-day slide since December 27, 2004. Brent crude gained 11 cents to settle at $114.03 a barrel.
Two of seven forecast tracks show the storm heading toward the Gulf of Mexico, where the United States has a high concentration of oil and natural gas production. Four show it heading toward Guatemala, Belize or the Yucatan Peninsula.
Packing winds near 60 mph as of 2 p.m. EDT, Gustav could strengthen into a hurricane prior to moving over land, the U.S. National Hurricane Center said.
The storm was located about 225 miles south-southeast of Port au Prince, Haiti, moving northwest near 14 mph on Monday afternoon.
“The session was lackluster and was looking for direction when news of the upgrade of Gustav came in and all of a sudden prices rose,” said Gene McGillian, analyst for Tradition Energy in Stamford, Connecticut.
Further support on Monday came from ongoing tension between the West and Russia over Georgia and expectations that oil exporter group OPEC, which meets on September 9, could trim production should prices fall further.
Russia’s parliament unanimously approved resolutions on Monday calling for the recognition of two rebel regions of Georgia as independent states, a move likely to worsen already strained relations with the West.
Moscow’s military intervention in Georgia has disrupted some shipments of Azeri oil through Georgia.
Iran’s oil minister said on Monday he expected OPEC to work on preventing the falling trend in crude prices and also to study oversupply in the market when it meets on September 9 in Vienna.
Venezuela said on Friday OPEC should consider cutting oil production at the meeting if it decides that recent price declines constitute a sustained downturn.
An OPEC source, however, said, the cartel is likely to keep oil output policy unchanged.
Saad al-Shuwaib, the chief executive of Kuwait’s state oil firm, said the OPEC-member is pumping around 2.5 million barrels per day (bpd) of crude oil and aims to boost capacity to 3 million bpd in the first half of 2009.
Oil has tumbled from a record high over $147 struck in July on growing signs demand in the United States and other consumer nations has faltered due to surging fuel costs.
Reporting by Matthew Robinson; Gene Ramos and Robert Gibbons in New York, Fayen Wong in Perth and Alex Lawler in London; editing by Jim Marshall