Oil rises above $96 on Tropical Storm Isaac
The price of oil rose to above $96 a barrel on Tuesday as weather forecasters said Tropical Storm Isaac, which was causing oil production cuts in the Gulf of Mexico, could soon gain intensity and turn into a hurricane.
By early afternoon in Europe, benchmark oil for October delivery was up 61 cents to $96.08 per barrel in electronic trading on the New York Mercantile Exchange. On Monday, the contract fell 68 cents to close at $95.47.
In London, Brent crude rose 34 cents to $112.60 a barrel on the ICE Futures exchange.
So far, Tropical Storm Isaac has led to refineries with the combined capacity to refine 1 million barrels of oil per day to begin suspending operations. The U.S. consumes about 19 million barrels of oil products per day.
Although the storm isn't expected to damage refineries, refinery owners often shut down operations in advance of a storm. If refineries lose power suddenly, it can take several days to restart them. If refiners conduct what is known as an orderly shutdown, operations can be restarted as soon as the source of power is assured.
Oil analyst Stephen Schork said in an email commentary that traders are focusing on a Venezuelan refinery fire, Tropical Storm Isaac and U.S. consumer confidence, which he said was expected to rise for the month of August.
Rising confidence is a sign that consumers might be ready to spend, which could lead to an increase in fuel consumption and move prices higher.
Another factor pushing up prices was an intense fire at the Amuay refinery in western Venezuela. The fire has been burning since a huge explosion at the refinery on Saturday caused a suspension of operations there.
Investors will also be monitoring fresh information on U.S. stockpiles of crude and refined products.
Data for the week ending Aug. 24 is expected to show draws of 2 million barrels in crude oil stocks and 2 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos.
The American Petroleum Institute will release its report on oil stocks later Tuesday, while the report from the Energy Department's Energy Information Administration — the market benchmark — will be out on Wednesday.
In other Nymex energy trading, gasoline was down 1.89 cents to $2.9311, while natural gas lost 4.2 cents to $2.611 per 1,000 cubic feet. Heating oil added 1.79 cents to $3.1374 a gallon.
Pamela Sampson in Bangkok contributed to this report.