World oil prices surged a dollar yesterday on worries that the ongoing storm season in the US Gulf would continue to hamper energy production and imports, delaying vital pre-winter stock building.
Fund buying ahead of the weekend and renewed concern about the fate of Russian oil firm Yukos added to bullish sentiment.
London Brent crude futures were up 97 cents at $41.72 (€34.24) a barrel, after hitting a high of $41.85. US light crude gained 62 cents to $44.50 a barrel.
Hurricane Ivan's assault on the US Gulf coast appears to have caused only very minor damage to oil facilities. But as Ivan abates, Tropical Storm Jeanne is following and is also likely to disrupt some production and imports.
"We expect upside price pressure to persist," Barclays Capital said in a report. "Although \ is expected to miss the Gulf coast, it could disrupt tankers."
Oil companies are estimated to have shut in about four million barrels per day of production this week until Thursday as a precautionary measure against Ivan.
More than 11 billion cubic feet a day of gas production and 13 per cent of total US refining capacity has also been shut this week, while the closure of Gulf ports has prevented millions of barrels of oil imports from entering the country.
Merrill Lynch analysts said oil and natural gas stocks in coming weeks would be affected by the closures. "The loss of production over this period, coupled with the disruption to imports offloading in the Gulf of Mexico \ the key factors," they said.
A string of storms in the past month has reduced US crude inventories. The energy department said on Wednesday that crude stocks had fallen last week for the seventh week in a row, at a time when inventories should start to build.
The temporary halt in refinery operations is also likely to have curtailed vital production of winter heating fuels.
