Oil rises above $74 in Asia amid risks to Gulf of Mexico production in the hurricane season

By Eileen Ng, AP
Sunday, August 22, 2010

Oil rises above $74 in Asia amid hurricane risks

KUALA LUMPUR, Malaysia — Oil prices rose above $74 a barrel Monday in Asia as Tropical Storm Danielle in the Atlantic threatened to become a more potent storm, providing a reminder that hurricane season can disrupt crude production in the Gulf of Mexico.

Benchmark crude for October delivery was up 36 cents to $74.18 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract lost 97 cents to settle at $73.82 on Friday.

Crude prices rose amid concerns that Tropical Storm Danielle is strengthening in the Atlantic and could become a hurricane by late Tuesday. But forecasters have said it appears to be heading toward Bermuda and will not threaten any major land area.

“The Tropical Storm Danielle should pose no threat to production facilities in the Gulf of Mexico but it is providing enough support for oil to allow prices to hold on to $74 a barrel,” said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.

Shum said market sentiment remained pessimistic amid uncertainties over the global economic recovery.

He pegged crude prices at around $75 a barrel in the near term, with a floor provided by production concerns amid the hurricane season.

In other Nymex trading in September contracts, natural gas for September delivery fell 4.6 cents to $4.071 per 1,000 cubic feet while heating oil added 0.7 cent to $1.978 a gallon and gasoline rose 0.47 cent to $1.930 a gallon.

Brent crude was up 23 cents at $74.49 a barrel on the ICE futures exchange.

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