Oil Already Going Up

Oil prices rise on worries about Hurricane Gustav
By ALEX KENNEDY – 2 hours ago

SINGAPORE (AP) — Oil prices in Asia rose Tuesday on concerns Hurricane Gustav may disrupt oil operations in the Gulf of Mexico.

"It's hard to predict where Gustav will strike," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore. "But the market is reacting to it and edging up some."

Light, sweet crude for October delivery was up 58 cents at $115.69 a barrel in electronic trading on the New York Mercantile Exchange by midafternoon in Singapore. The contract rose 52 cents overnight to settle at $115.11 a barrel.

Gustav became a hurricane Tuesday as it approached Haiti's southern coast, and is also on track to hit Cuba.

The National Hurricane Center in Miami said the hurricane's maximum sustained winds were near 80 mph (130 kph).

Haitians were told to prepare for evacuations as the storm formed Monday in the Caribbean. Haiti upgraded storm warnings to hurricane warnings along much of its coast as Gustav closed in from the south.

Forecasters said storm preparations in Haiti should be rushed to completion and that floods and landslides were possible across its southern peninsula. The forecasts suggested Gustav's eye could pass near the capital of Port-au-Prince, home to nearly 3 million people.

Traders worried that the hurricane could head into the Gulf, where there are many oil drilling platforms. The storm was centered about 130 miles (210 kilometers) south-southeast of Port-au-Prince and was moving toward the northwest near 12 mph (19 kph).

Keeping a lid on oil's gains was a stable dollar. Oil prices typically fall when the dollar strengthens as investors buy commodities as a hedge against inflation and weakness in the U.S. currency. The euro fell to $1.4686 on Tuesday while the dollar gained to 109.74 yen.

"Lately, there has been a very strong correlation between oil futures and the U.S. dollar," Shum said.

In other Nymex trading, heating oil futures rose 0.91 cent to $3.16 a gallon, while gasoline prices gained 0.87 cent to $2.86 a gallon. Natural gas futures increased 12.5 cents to $7.95 per 1,000 cubic feet.

In London, October Brent crude rose 26 cents to $114.28 a barrel.