LONDON (Reuters) – Oil rose above $76 on Wednesday as a tropical storm gathered strength and headed toward the Gulf of Mexico, threatening U.S. oil and gas rigs still recovering from last year’s devastating hurricanes.
The storm triggered supply concerns in the world’s largest energy consumer ahead of government data expected to show a fall in gasoline stocks due to strong summer driving demand.
London ICE Brent crude rose 50 cents to $76.39 a barrel by 1050 GMT. U.S. light crude rose 39 cents to $75.30 a barrel.
Brent is at a rare premium to U.S. oil because European markets are more directly affected by real and feared supply disruptions in Nigeria, Russia and the Middle East.
Tropical Storm Chris intensified over the Caribbean and could become the year’s first hurricane to threaten the Gulf of Mexico later Wednesday or early Thursday, the Miami-based National Hurricane Center said. The storm’s forecast path takes it into the Gulf early on Monday.
Last year’s hurricanes shut in a quarter of U.S. crude and fuel output and sent oil to record highs. Around 12 percent of the U.S. Gulf of Mexico’s 1.5 million barrels per day (bpd) oil output is still offline.
“It is a timely reminder of how sensitive the market is to news of hurricanes ahead of the season’s typical peak period,” said Eoin O’Callaghan of BNP Paribas.
The storm gave another boost to gasoline futures, already rising on expectations that U.S. stocks of the motor fuel will fall 1.6 million barrels when the government releases its latest inventory data at 1430 GMT on Wednesday.
A string of outages have left refiners struggling to keep up with strong growth in gasoline demand as U.S. motorists take to the roads for summer vacation.
“Recent refinery disruptions suggest potential for another larger-than-consensus fall in gasoline stocks,” O’Callaghan said.
Crude stocks are expected to have dropped by 700,000 barrels but distillates, which include heating oil and diesel, are set to rise 700,000 barrels, according to a Reuters survey of analysts.
Continued fighting between Israel and Hizbollah, a bomb blast on Iraq’s oil infrastructure and Iran’s nuclear stand-off with the West added to the bullish sentiment.
Hizbollah guerrillas battled up to 6,000 Israeli troops on five fronts in south Lebanon on Wednesday, escalating a conflict which Israel’s prime minister vowed to pursue until an international force arrived.
Israel is seeking to damage Hizbollah as much as it can before diplomacy ends the war. U.S. Secretary of State Condoleezza Rice said a ceasefire could be reached within days.
But the United Nations Security Council has yet to agree on a mandate for an international peacekeeping force.
An Iraqi pipeline carrying crude from the country’s northern oilfields to Turkey’s Ceyhan port was bombed on Monday, pushing back the planned restart of exports along the route, industry sources said.
Concerns over Iran persisted as President Mahmoud Ahmadinejad insisted on the country’s right to produce nuclear fuel, despite a U.N. resolution demanding Tehran suspends its nuclear activities by August 31 or face the threat of sanctions.