* Oil rises as Hurricane Gustav threatens Gulf of Mexico
* Investors eye tension between West and Russia
* U.S. June oil demand down 5.6 percent
(Updates prices)
By Matthew Robinson
NEW YORK, Aug 26 (Reuters) - Oil rose on Tuesday as
Hurricane Gustav churned through the Caribbean and took aim at
U.S. oil and natural gas installations in the Gulf of Mexico.
Most weather models showed Gustav entering the Gulf -- home
to a quarter of U.S. oil production and 15 percent of natural
gas output -- by early Sunday.
"All of the oil platforms off Texas and Louisiana will
probably be at risk, but that's real long-range," Eric Wilhelm,
a senior meteorologist at AccuWeather Inc, told Reuters, adding
that Gustav could hit the Gulf of Mexico as a Category 3
hurricane.
U.S. crude <CLc1> settled up $1.16 at $116.27 a barrel,
while London Brent crude <LCOc1> traded up 60 cents to settle
at $114.63 a barrel.
Gustav, a Category 1 hurricane, hit southern Haiti on
Tuesday, the U.S. National Hurricane Center said.
[]
Royal Dutch Shell Plc <RDSa.L>, one of the top producers in
the region, said it would begin evacuating nonessential workers
from offshore rigs on Wednesday. []
Other companies were also monitoring the storm, which
pushed up U.S. natural gas futures.
Hurricanes Katrina and Rita devastated oil and natural gas
production and refining facilities in the region in 2005,
sending prices to then-record highs.
The storm helped stem oil's slide from a record above $147
a barrel hit in July, as mounting economic problems in consumer
nations threaten demand.
U.S. oil demand for June was 5.6 percent below a year ago,
the U.S. Energy Information Administration reported on Tuesday,
as high fuel prices and the wider economic crisis battered
motorists in the world's top consumer. []
Germany's gross domestic product contracted by 0.5
percentage points in the April-June period, the first
contraction since 2004 and raising concerns Europe's biggest
economy could be headed for a recession. []
Further support for prices on Tuesday came from escalating
tensions between the West and Russia over Georgia.
Russia recognized two rebel regions of Georgia -- South
Ossetia and Abkhazia -- as independent states on Tuesday,
escalating tension in the volatile Caucasus and putting Moscow
on a collision course with the West.
While the conflict has disrupted Azeri oil shipments
through Georgia, analysts said this latest development was
having little influence on oil prices so far.
Analysts polled by Reuters forecast weekly U.S. inventory
data due to be released on Wednesday will show a 1 million
barrel build in crude stocks, a 500,000 barrel build in
distillate stocks, and a 2.9 million barrel draw in gasoline
inventories. []
(Reporting by Osamu Tsukimori and James Topham in Tokyo; Alex
Lawler and Santosh Menon in London, editing by Jim Marshall)
