Oil rose for a fourth straight day to above $119 a barrel on Thursday, on fears Tropical Storm Gustav may hit the Gulf of Mexico after it morphs into a major hurricane, crippling the heart of US offshore production.
Crude for October delivery rose 93 cents to $119.08 a barrel by 0656 GMT, after earlier hitting an intraday high of $119.25 and chalking a gain of $3.56 over the past three sessions. London Brent crude was up $1.03 cents at $117.25 a barrel.
Gustav is expected to hit the US Gulf Coast around Monday as the first major hurricane to threaten US energy installations there since Katrina and Rita in 2005, and about 85 per cent of US offshore oil and gas production could be in its path.
AccuWeather said Gustav could strengthen into a Category 4 or 5 storm over the Gulf -- home to a quarter of US crude oil production and 15 per cent of the nation's natural gas output.
Shell Oil Co, the US Gulf of Mexico's largest producer, said its oil production would be affected as early as Thursday as it evacuated all workers from offshore operations. Gustav could shut down 85 per cent of US production platforms in the Gulf, private forecaster Planalytics said.
"It looks as though the hurricane is on track to inflicting damage," said Ken Hasegawa, an analyst at broker Newedge in Tokyo, adding the storm was the only major reason behind the extended gains in oil prices. "It would be very difficult to be in a short position today and tomorrow."
Hasegawa said oil prices could surpass last week's high of $122.04 by the end of day.
"This is the time of the year that (hurricane) premiums can be put into the market, $10 to $15 a barrel," said Peter McGuire, managing director of Commodity Warrants Australia. "(There is the) Labour Day holiday on Monday, and the market will be shut. There's a lot of nervousness in the market."
McGuire said oil could hit around $130 over the next week-and-a-half on hurricane worries. Oil was last at that level five weeks ago.
Analysts say US companies could be forced to draw on oil inventories to compensate for disruptions.
Crude for October delivery rose 93 cents to $119.08 a barrel by 0656 GMT, after earlier hitting an intraday high of $119.25 and chalking a gain of $3.56 over the past three sessions. London Brent crude was up $1.03 cents at $117.25 a barrel.
Gustav is expected to hit the US Gulf Coast around Monday as the first major hurricane to threaten US energy installations there since Katrina and Rita in 2005, and about 85 per cent of US offshore oil and gas production could be in its path.
AccuWeather said Gustav could strengthen into a Category 4 or 5 storm over the Gulf -- home to a quarter of US crude oil production and 15 per cent of the nation's natural gas output.
Shell Oil Co, the US Gulf of Mexico's largest producer, said its oil production would be affected as early as Thursday as it evacuated all workers from offshore operations. Gustav could shut down 85 per cent of US production platforms in the Gulf, private forecaster Planalytics said.
"It looks as though the hurricane is on track to inflicting damage," said Ken Hasegawa, an analyst at broker Newedge in Tokyo, adding the storm was the only major reason behind the extended gains in oil prices. "It would be very difficult to be in a short position today and tomorrow."
Hasegawa said oil prices could surpass last week's high of $122.04 by the end of day.
"This is the time of the year that (hurricane) premiums can be put into the market, $10 to $15 a barrel," said Peter McGuire, managing director of Commodity Warrants Australia. "(There is the) Labour Day holiday on Monday, and the market will be shut. There's a lot of nervousness in the market."
McGuire said oil could hit around $130 over the next week-and-a-half on hurricane worries. Oil was last at that level five weeks ago.
Analysts say US companies could be forced to draw on oil inventories to compensate for disruptions.
US government data showed an unexpected 100,000-barrel drop in US crude inventories last week, against forecasts of a 1 million-barrel rise.
The dollar slipped from a six-month high against the euro on Thursday after comments by European Central Bank officials the previous day scaled back speculation about an ECB rate cut.
Traders were also eyeing an OPEC meeting scheduled for September 9 in Vienna, as well as escalating tensions between Russia and the West after US President George W. Bush condemned Russia for recognising breakaway regions in Georgia.
The dollar slipped from a six-month high against the euro on Thursday after comments by European Central Bank officials the previous day scaled back speculation about an ECB rate cut.
Traders were also eyeing an OPEC meeting scheduled for September 9 in Vienna, as well as escalating tensions between Russia and the West after US President George W. Bush condemned Russia for recognising breakaway regions in Georgia.
Venezuelan President Hugo Chavez on Wednesday said oil prices were fair, and the nation's energy minister said OPEC should keep output steady or make cuts at its next meeting in September.