Oil prices rise as tropical depression heads toward Gulf of Mexico; rising stocks boost crude

Oil prices rise on stormy forecast for Gulf

Oil prices advanced Thursday as energy producers kept an eye on a developing tropical storm that could move into the Gulf of Mexico by the weekend.

At the gas pump, prices were unchanged at a national average of $2.718 for a gallon of unleaded regular gasoline, according to AAA, Wright Express and Oil Price Information Service. The price is nearly 2 cents less than it was a month ago and about 25 cents higher than a year ago.

Benchmark crude surged $2.74, or 3.6 percent, to settle at $79.30 a gallon on the New York Mercantile Exchange.

Oil and other energy contracts also benefited from surging stock prices that rose on stronger earnings from companies like Caterpillar Inc., 3M Co., UPS Inc. and AT&T Inc.

The Dow Jones industrial average gained more than 225 points and broader indexes rose more than 2 percent in afternoon trading.

The National Hurricane Center in Miami said a storm system, which has already caused flooding in Puerto Rico, the Dominican Republic and Haiti, could become Tropical Storm Bonnie later Thursday and reach the Gulf of Mexico by Saturday.

The federal government has ordered some ships involved in the BP oil spill cleanup to return to port and Shell Oil has begun evacuating nonessential employees from its Gulf operations. Other energy companies in the Gulf are considering evacuations as well.

In other Nymex trading, natural gas prices rose after the government said reserves increased last week but remained below year-ago levels.

Still the supply was 9.9 percent above the five-year average as overall demand remains weak.

“Given the hot weather we’ve had so far this year, which has been much hotter than last summer, we’ve put about the same amount of gas in the ground,” said Addison Armstrong, director of market research at Tradition Energy. “This heat has helped keep demand high from electricity generators, but on the industrial side, we just don’t see any follow-through.

Natural gas gained 13 cents at to settle at $4.643 per 1,000 cubic feet; heating oil rose 7.32 cents to settle at $2.0624 a gallon and gasoline added 7.88 cents to settle at $2.1466 a gallon.

Brent crude rose $2.45 to settle at $77.82 on the ICE futures exchange.

Associated Press writers Barry Hatton in London and Alex Kennedy in Singapore contributed to this report.