Oil raced towards $68 this morning as Hurricane Rita bore down on Gulf of Mexico oil and gas production and forced six refineries in Texas to shut down.
Companies scrambled to close facilities as Rita, now a maximum Category 5 storm, aimed her 175 mph (280 kph) winds on Texas, home to a quarter of US refining capacity.
US light crude rose $1.15 to $67.95 a barrel, just below Wednesday's three-week high of $68.27. It last traded at $67.80.
London Brent crude was up 77 cents at $65.50, after hitting an intraday high of $65.64 a barrel.
With 18 of Texas' 26 refineries located near the Gulf of Mexico coastline, the Energy Information Administration (EIA) said Rita - the third most intense Atlantic hurricane on record gauged by internal pressure - could have a "substantial impact".
But prices, still below the record-high of $70.85 a barrel touched in Katrina's wake, were kept in check by a government report showing US gasoline stocks rose by 3.4 million barrels last week, against the 200,000-barrel fall expected by analysts.
Stocks rose as demand for gasoline weakened, reinforcing signals that the surge in prices this year - up 56 per cent since January - is starting to curtail demand.
US crude stocks fell 300,000 barrels, compared to forecasts for a rise of 200,000 barrels, while supplies of winter fuel heating oil added to their year-on-year surplus.