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 worldâ€™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 â€œa day or soâ€ 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.
â€œOil is higher as the tropical storm is expected to shut in oil in the Gulf of Mexico almost entirely in coming days,â€ said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. â€œThe 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.â€
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 gradeâ€™s premium to WTI was at $16.60, compared with $17.44 on Aug. 24.
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