Oil Rises as Isaac Shuts Output

Oil climbed the most in a week and gasoline rose to the highest in almost four months as Tropical Storm Isaac strengthened, crimping output in the Gulf of Mexico, and a fire in Venezuela shut part of the world’s No. 2 refinery.

West Texas Intermediate futures climbed as much as 1.6 percent in New York and gasoline surged 4.1 percent. The storm is expected to become a hurricane in “a day or so” as it approaches the northern Gulf coast, the U.S. National Hurricane Center said today. Isaac has shut about 24 percent of U.S. oil production and 8.2 percent of natural-gas output from the Gulf, the Bureau of Safety and Environmental Enforcement said yesterday. Firefighters in Venezuela are working to quench fires at two storage tanks after a gas explosion at the Amuay plant, part of the Paraguana complex, killed at least 39 people.

“Oil is higher as the tropical storm is expected to shut in oil in the Gulf of Mexico almost entirely in coming days,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “The market is reacting to this temporary supply risk, which will lead to a drop in U.S. inventories. The temporary shutdown of refineries in the Gulf will also lower gasoline supplies.”

Oil for October delivery increased as much as $1.57 to $97.72 a barrel in electronic trading on the New York Mercantile Exchange and was at $97.28 at 1:37 p.m. London time. Front-month prices gained 0.2 percent last week, closing at $96.15 on Aug. 24, and are down 1.4 percent this year.

Brent oil for October settlement rose 38 cents, or 0.3 percent, to $113.97 a barrel on the London-based ICE Futures Europe exchange. The European benchmark grade’s premium to WTI was at $16.60, compared with $17.44 on Aug. 24.

Bloomberg

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