Oil Rises in Asia as Gustav Poised to Hit Gulf Coast

SINGAPORE - Oil prices rose in Asian trading Monday as Hurricane Gustav barreled toward the Gulf of Mexico's oil fields, with nearly all offshore production shut and refiners along the coast cutting runs or closing entirely.

Light, sweet crude for October delivery rose $1.90 to $117.36 a barrel in electronic trading on the New York Mercantile Exchange. The U.S. market was closed Monday for the Labor Day holiday.

The Energy Department said operators had shut in 100 percent of the Gulf's oil production and 95 percent of its natural gas output, and evacuated workers from hundreds of platforms and drilling rigs. The Gulf normally produces about a quarter of U.S. crude.

Nine refineries in Louisiana and Texas with combined capacity of more than 2 million barrels a day were shut or running at reduced rates, according to company statements and analysts' estimates.

"The question is not whether there is damage, but how much and for how long," said a Singapore-based energy analyst. "Katrina taught the market that the real cost shows up weeks later, when repairs drag on."

The Bush administration said it stood ready to release crude from the Strategic Petroleum Reserve if needed, as it did after Katrina. The reserve holds about 707 million barrels.

Gasoline futures rose more modestly. Pump prices, which peaked above $4.10 a gallon nationally in July, averaged $3.68 Monday, and analysts said a serious hit to refineries could push them back toward $4.

___

Associated Press writers contributed to this report.

RECOMMEND THIS STORY