* Oil rises for 2nd day on storm worry in the Caribbean
* Investors eye tension between West and Russia
* Key events ahead include U.S. oil data
TOKYO, Aug 26 (Reuters) - Oil extended gains to stay above
$115 a barrel on Tuesday, supported by worries that tropical
storm Gustav in the Caribbean would turn into a hurricane and
disrupt oil output in the Gulf of Mexico.
Crude for October delivery <CLc1> rose 37 cents to $115.48
a barrel by 0225 GMT, while London Brent crude <LCOc1> gained
42 cents to $114.45 a barrel.
Tropical Storm Gustav, the seventh tropical storm formed in
the central Caribbean, could strengthen into a hurricane before
striking vulnerable Haiti, the U.S. National Hurricane Center
said. []
It was expected to hit Hispaniola, the island shared by
Haiti and the Dominican Republic, on Tuesday. At least one
computer forecasting model showed the storm could enter the
Gulf.
A drop in the dollar against the yen, pressured by sharp
losses in the U.S. equities market, also helped buoy oil
prices. []
Jonathan Kornafel, Asia director at U.S.-based options
trader Hudson Capital Energy, based in Singapore, said concerns
about a possible hurricane had "a lot to do" with the gains in
the past two days.
Support also came from ongoing tension between the West and
Russia over Georgia and expectations that oil exporter group
OPEC, which meets on Sept. 9, could trim production should
prices fall further.
"I think overall the trend of the market is bearish right
now, but the hurricane premium as well as the Russia-NATO
premium is what's keeping the market from dropping further,"
Kornafel said.
Russia's parliament urged the Kremlin on Monday to
recognise two rebel regions of Georgia as independent states,
raising alarm in the West. []
Britain said on Monday it believed it would be wrong for
all NATO-Russia contacts to be suspended despite widespread
concern in the alliance about Russian military action in
Georgia.
OPEC OUTPUT
Iran's oil minister said on Monday he expected OPEC to work
on preventing the falling trend in crude prices and also to
study oversupply in the market when it meets on Sept. 9 in
Vienna. []
An OPEC source, however, said, the cartel is likely to keep
oil output policy unchanged. []
Another key piece of data on Wednesday will be U.S. crude
oil inventories, which are likely to have risen 1.4 million
barrels last week, a Reuters preliminary poll showed. []
In the previous week, crude stocks shot up by 9.4 million
barrels as crude imports rose after delivery delays caused by
Tropical Storm Edouard.
The poll of eight analysts showed an average forecast for a
400,000-barrel gain in distillates.
Analysts expect U.S. gasoline stocks to show a drop of 2.8
million barrels, a fifth straight weekly decline, as refiners
drained storage of summer-grade supply ahead of the Labor Day
holiday weekend, which marks the end of the summer driving
season.
(Reporting by Osamu Tsukimori: Editing by Nick Trevethan)
