Oil soared above $77 on Wednesday as a tropical storm strengthened and headed toward the Gulf of Mexico, threatening US oil and gas rigs still recovering from last year's devastating hurricanes.
LONDON: Oil soared above $77 on Wednesday as a tropical storm strengthened and headed toward the Gulf of Mexico, threatening US oil and gas rigs still recovering from last year's devastating hurricanes.
Concern about the storm's effect on energy supplies to the world's largest consumer supported prices even as US government data showed gasoline stocks fell less than analysts had expected.
London ICE Brent crude rose $1.22 to $77.12 a barrel by 1502 GMT. Brent is just a dollar below its July record of $78.18.
US light crude rose $1.29 to $76.20 a barrel.
Brent is at a rare premium to US oil because European markets are more directly affected by real and feared supply disruptions in Nigeria, Russia and the Middle East.
Tropical Storm Chris intensified over the Caribbean and could become the year's first hurricane to threaten the Gulf of Mexico later Wednesday or overnight, the Miami-based National Hurricane Center said. The storm's forecast path takes it into the Gulf early on Monday.
Hurricanes last year shut in a quarter of US crude and fuel output and sent oil to record highs. Around 12 percent of the US Gulf of Mexico's 1.5 million barrels per day (bpd) oil output is still offline.
"There is a little bit of excitement on the market due to the tropical storm," said Chip Hodge, Managing Director at John Hancock Financial Services in Boston.
"Some of the forecasts have it weaving its way towards the Gulf. People aren't going to go into the weekend short in case that comes to fruition."
US government data released on Wednesday showed gasoline stocks fell 100,000 barrels last week, a fraction of the 1.6 million barrel slide that analysts polled by Reuters had expected.
Demand growth from drivers on summer vacation stayed strong, despite high prices at the pump. Over the past four weeks, US motorists have consumed 1.6 percent more gasoline than during the same period a year ago.
The US consumes around 40 percent of the world's entire supply of gasoline.
"We certainly wouldn't have expected demand to be so resilient to high prices," said Hodge "Even with the price at $3 a gallon at the pump here. I don't know where the break in demand will come."
Crude stocks fell 1.8 million barrels, over a million more than the forecast fall of 700,000 barrels. Distillates rose 700,000 barrels, in line with expectations.
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