* Oil over $116 as Gustav shuts U.S. Gulf fields,
refineries
* Gustav expected to make landfall mid-Monday as Category 3
* Some traders wait to weigh up damage in hurricane's wake
(Updates prices, adds details)
By Fayen Wong
PERTH, Sept 1 (Reuters) - Oil prices rose more than $1 on
Monday after energy firms in the U.S. Gulf shut down nearly all
offshore oil output and a host of flood-prone coastal
refineries ahead of Hurricane Gustav, the biggest threat since
2005's devastating Katrina.
But prices pared some bigger earlier gains as traders
waited to see whether Gustav would leave lasting damage in its
wake after it slams into the Louisiana coast later in the day
as a major Category 3 hurricane.
U.S. light crude for October delivery <CLc1> rose $1.11 to
$116.57 a barrel by 0303 GMT, having briefly surged above $118
a barrel when the New York Mercantile Exchange (NYMEX) opened
for electronic trading several hours earlier than usual.
London Brent crude <LCOc1> rose 97 cents to to $115.02.
U.S. RBOB gasoline futures <RBc1> outpaced crude gains to
rise 5.08 cents, or 1.8 percent, to $2.9050 per U.S. gallon, as
traders feared the refining sector could be harder hit.
But oil prices have still barely recovered from last
month's over three-month low of nearly $111, with buyers
cautious even after the steep slump from mid-July's record high
$147.27.
"This is definitely a dangerous storm but I think most of
the market is in a wait-and-see mode, 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 sentiment in the market."
Energy companies are taking no chances, shutting down more
than 96 percent of U.S. Gulf oil production and 82 percent of
natural gas output 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.
At least nine oil refineries with a combined capacity of
2.2 million bpd were shut down and a half-dozen 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.
Forecasters predicted Gustav will make landfall west of New
Orleans around midday on Monday, with top winds expected to be
around 200 kph (125 mph), making it a Category 3 storm on the
five-step intensity scale. (See [] for more details)
GEOPOLITICS, OPEC IN BACKGROUND
Geopolitical tensions between Russia and the West also lent
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 their peak.
OPEC meets in Vienna on Sept. 9 to discuss output policy
but other member nations have not come out and publicly backed
Iran. Venezuela and Ecuador said on Friday that they expect the
oil exporters group to maintain current output
levels.[]
(Editing by Clarence Fernandez)
