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Oil prices rise only slightly on Gustav

Latest update : 2008-08-28

Oil prices rose only slightly in Asia on Thursday despite the high risk of tropical storm Gustav, which could build up to hurricane strength, reaching the Gulf of Mexico later in the day, threatening major US oil installations there.

World oil prices gained slightly in Asia on Thursday despite a tropical storm's threat to oil installations in the Gulf of Mexico and bullish inventory data, analysts said.

New York's main contract, light sweet crude for delivery in October, rose 55 cents to 118.70 dollars a barrel after a gain of 1.88 dollars to 118.15 at the close of trading on the New York Mercantile Exchange Wednesday.

Brent North Sea crude for October was 27 cents higher at 116.49. The contract rose 1.59 dollars to settle at 116.22 in London on Wednesday.

Dave Ernsberger, Asia director of global energy information provider Platts in Singapore, said prices in Asia had gained only marginally from their Asian close Wednesday.

"For me, the markets are showing signs of being war-weary" after crude prices fell 24 percent in just over a month, he said.

Prices have sunk from record highs above 147 dollars a barrel in early July after surging from 100 dollars at the start of the year.

Analysts say the struggling economy in the United States, the world's biggest energy consumer, has curbed demand for oil.

The threat posed by Tropical Storm Gustav, along with the latest weekly data from the United States Department of Energy, should have prompted greater market reaction, Ernsberger said.

"People just aren't in the mood to buy oil these days," he said.

But traders kept close attention on Gustav, which could build back up to hurricane strength and move into the Gulf region by this weekend.

The Gulf of Mexico accounts for 26 percent of US crude production and 11 percent of natural gas output.

In 2005, hurricanes Katrina and Rita damaged or destroyed about 165 oil platforms of about 4,000 located in the Gulf.

Energy giant Royal Dutch Shell said Wednesday it had begun "evacuating personnel not essential to producing and drilling operations in the Gulf."

The market shrugged off the latest US weekly report on energy inventories.

The US Department of Energy said crude stockpiles had fallen by 100,000 barrels last week, instead of the 2.2 million barrel increase forecast by most analysts.

Date created : 2008-08-28

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