* Several offshore U.S. oil platforms toppled by Ike
* U.S. crude stocks drop, gasoline lowest level on record
* U.S. stock markets and dollar slide
(Updates prices)
By Richard Valdmanis and Rebekah Kebede
NEW YORK, Sept 17 (Reuters) - Oil rose about $6 on Wednesday
after a U.S. government report showed nationwide energy inventories
shrinking in the aftermath of back-to-back hurricanes on the Gulf
Coast and the greenback slid against the euro.
The gains followed the steepest two-day sell-off in the oil
market in four years, which came as mounting economic turmoil in the
United States sent investors fleeing to safer havens, like bonds and
gold.
"Crude oil prices have rebounded, having fallen sharply to near
$90. At that level, I think the bear market near-term correction has
run its course. Prices are also up on low petroleum inventories and
on the prospect that they may even go lower in coming weeks," said
Tom Knight, a trader at Truman Arnold in Texarkana, Texas.
U.S. crude oil prices <CLc1> rose $6.10 to $97.25 a barrel by
1833 GMT while London Brent crude oil <LCOc1> rose $5.72 to $94.94 a
barrel.
The gains came after the U.S. Energy Information Administration
reported a larger-than-expected decline in domestic crude oil
inventories of 6.3 million barrels as hurricanes Gustav and Ike
slashed production and imports. []
The EIA report also showed U.S. gasoline inventories fell last
week to their lowest level on record as refinery production took a
hit from the storms.
Oil companies were working to restore operations in the Gulf of
Mexico and along the Gulf Coast after the latest hurricane, Ike,
slammed into Texas last Saturday and left a quarter of the nation's
energy output idled in its wake.
As of Wednesday morning, more than 97 percent of the Gulf of
Mexico's oil production was still shut and a dozen refineries along
the coast, representing a fifth of U.S. fuel production, remained
off line. []
Oil received additional support after the euro rose to a session
high against the dollar after breaking a key technical level,
forcing investors who had bet against the single zone currency to
buy euros to prevent further losses. []
Traders were keeping a close eye on financial markets, however,
as U.S. stocks slid due to a spike in interbank lending rates and on
concerns the U.S. government rescue of insurer American
International Group <AIG.N> would not stem the turmoil that has
rocked markets this week. []
"We expect markets to remain volatile for at least the next few
days until people start to refocus on oil market fundamentals," said
Helen Henton, head of commodities for Standard Charter in London.
Oil prices are down more than third since peaks above $147 a
barrel in mid-July as high energy costs and economic woes cut deeply
into fuel demand.
Fresh attacks on Nigerian oil installations also provided some
support to the market Wednesday. []
(Reporting by Richard Valdmanis and Rebekah Kebede, additional
reporting by Jane Merriman, David Sheppard, and Matthew Robinson in
London and Annika Breidthardt in Singapore, editing by Marguerita
Choy)
