* Oil rises above $117 as Gustav shuts U.S. Gulf output
* Gustav expected to be a Category 3 hurricane
* Russia fires warning before EU meets
By Fayen Wong
PERTH, Sept 1 (Reuters) - Oil rose nearly $2 to over $117
on Monday as U.S. energy companies reaced to shut down offshore
oil production and flood-prone refineries in the Gulf Coast
ahead of Hurricane Gustav, which is evoking memories of 2005's
devastating Hurricane Katrina.
Forecasters predicted Gustav would be a major Category 3
hurricane by Monday morning local time, with top winds at
around 200 kph (125 mph) when it slams into the Louisiana
coast, west of New Orleans. (See [] for more details)
Over 96 percent of U.S. Gulf oil production and 82 percent
of natural gas output had been closed as of Sunday afternoon,
the U.S. Minerals Management Service said. The Gulf normally
pumps a quarter of all U.S. production and about 15 percent of
its domestic natural gas output.
U.S. light crude for October delivery <CLc1> rose $1.75 to
$117.21 a barrel by 0016 GMT, after trading as high as $118.60
after the electronic market was opened.
The New York Mercantile Exchange (NYMEX) opened trading on
the CME Globex platform at 1630 GMT on Sunday, three and half
hours earlier than normal, to facilitate trading before Gustav
makes landfall.
London Brent crude <LCOc1> rose $1.43 to $115.48.
"This is definitely a dangerous storm but I think most of
the market is in a wait-and-see mode and waiting to see (if
there are) disruptions to oil facilities and pipeline
infrastructure before they make a big move," said Gerard Burg,
a commodities analyst at the National Bank of Australia in
Melbourne.
"Investors are a lot more cautious now given the general
bearish sentiments in the market."
Oil and natural gas companies shut down production across
the Gulf of Mexico over the weekend to prepare for the
Hurricane Gustav, possibly with a weaker punch than Hurricane
Katrina, as coastal refineries braced for possible floods.
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At least nine oil refineries with a combined capacity of
2.2 million bpd, were shut down and several other refineries
had reduced throughput because of the storm. []
The shutdown of key infrastructure, including the Henry Hub
delivery point and the Louisiana Offshore Oil Port, prompted
NYMEX on Sunday to declare force majeure on all delivery
obligations under its August and September natural gas futures
contracts.
Geopolitical tensions between Russia and the West were also
lending support to oil prices.
Russia does not want a confrontation with the West but will
hit back if attacked, Kremlin leader Dmitry Medvedev said on
Sunday, a day before EU leaders meet to draft a response to
Moscow's actions in Georgia. []
Russia, the world's largest exporter of natural gas and the
second-largest oil exporter, supplies more than a quarter of
Europe's gas needs.
Iran's oil minister said on Sunday $100 a barrel was the
lowest acceptable price for crude oil. Iran, the second-largest
producer in the Organization of Petroleum Exporting Countries,
has said the oil market is oversupplied in recent weeks as oil
prices have plunged more than $30 a barrel from its peak over
$147 set in mid-July.
OPEC meets in Vienna on Sept. 9 to discuss output policy
but other member nations have not come out and publicly backed
Iran.
OPEC members Venezuela and Ecuador said on Friday that they
expect the oil exporters group to maintain current production
levels at next month's meeting. []
(Editing by Kim Coghill)
