UPDATE 8-Oil falls as US, IEA ready emergency stockpiles

                                
 * IEA will release stocks if storm disrupts U.S. output
                                
 * Gustav seen hitting U.S. Gulf Coast early next week
 (Updates settlement prices, adds Planalytics forecast)
                                
 NEW YORK, Aug 28 (Reuters) - Oil prices fell more than $2
on Thursday after the U.S. government and the International
Energy Agency pledged to release emergency stockpiles if
Tropical Storm Gustav disrupted U.S. oil production.
                                
 U.S. crude <CLc1> settled down $2.56 at $115.59 barrel,
after falling as low as $114.08 earlier. London Brent crude
<LCOc1> traded down $2.05 to settle at $114.17 a barrel.
                                
 Gustav was forecast to strengthen into a hurricane as it
neared the Gulf of Mexico, home to a quarter of U.S. crude oil
production and 15 percent of its natural gas output.
[ID:nN27463894]
                                
 The storm, packing winds of 70 mph (110 kph), was bearing
down on Kingston, Jamaica, at midday Thursday.
                                
 Energy companies operating in the Gulf began shutting
production and evacuating personnel ahead of the storm, the
biggest threat to the region's oil infrastructure since
hurricanes Katrina and Rita in 2005. [nN28314466]
                                
 The Louisiana Offshore Oil Port -- the nation's only
deepwater oil port and a major conduit for U.S. crude imports
-- expected to stop offloading tankers by this weekend.
[ID:nN05323670]
                                
 The U.S. Department of Energy said Thursday it was ready to
tap the nation's Strategic Petroleum Reserve in the event
Gustav caused a severe production disruption, echoing earlier
comments from the IEA. [nWAT009958]
                                
 "We always stand ready to bring additional relief to the
market, if it's necessary," Aad van Bohemen, head of the
emergency planning and preparation division at the IEA, told
Reuters. [nLS498629]
                                
 As Gustav churned through the Caribbean, Tropical Storm
Hanna formed in the Atlantic Ocean with 40 mph (65 kph) winds
and a track that could take it toward the Bahamas and Florida
next week, the U.S. National Hurricane Center said.
                                
 Hurricanes have become a key focus in the oil market since
the 2005 storms temporarily knocked out a quarter of U.S. oil
and refined fuel production, sending prices to then-record
highs.
                                
 Forecaster Planalytics said that any damage to offshore
platforms would not be long-lasting, after predicting on
Wednesday that up to 85 percent of the Gulf's oil and natural
gas production could be shut in by Gustav.
                                
 Faltering demand in the United States and Europe due to
high fuel prices has helped knock oil prices from their
all-time peak of $147.27 reached on July 11.
                                
 Further price weakness on Thursday came from a report from
the U.S. Energy Information Administration showing domestic
natural gas storage rose 105 billion cubic feet last week, far
larger than the forecast in a Reuters poll for a 84 bcf
increase. [ID:nEIA000769]
                                
 "The big natgas storage build is lending a bearish tone to
the market, even as everyone is still watching Gustav closely,"
said Phil Flynn, an analyst at Alaron Trading in Chicago.
 (Reporting by Matthew Robinson, Robert Gibbons, and Gene Ramos
in New York; Jane Merriman in London, and Osamu Tsukimori in
Tokyo; editing by Matthew Lewis)