PERTH - Oil rose more than $1 to top $115 a barrel on Monday, as investors eyed a potential supply threat from Tropical storm Fay to oil and gas production in the Gulf of Mexico.
But analysts said a rising U.S. dollar and news that Russia would begin withdrawing its troops from Georgia, a key supply route from the Caspian to Europe, could potentially limit oil's gains.
U.S. light crude for September delivery was up $1.30 to $115.04 a barrel by 0714 GMT. The contract settled down $1.24 at $113.77 a barrel on Friday, after dipping to $111.34, the lowest level since May 1.
London Brent crude for October rose $1.38 to $113.93.
"The storm threat is the main driver here," said Gerard Burg, a commodities analyst at the National Bank of Australia in Melbourne.
"Oil prices also fell to the lower end of the recent trading range on Friday, so some traders in the market probably saw that as a buying opportunity."
Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) and Marathon Oil Corp (MRO.N: Quote, Profile, Research, Stock Buzz) have pulled non-essential workers from the eastern and central Gulf of Mexico due to the storm threat, but offshore production was unaffected, the companies said on Sunday. ID:nN17460141
On Sunday local time, Fay was expected to avoid most of the offshore production areas in the Gulf and instead strike the Gulf Coast of Florida on Tuesday or Wednesday, the U.S. National Hurricane Center forecast.
Some computer models, however, predict Fay may enter eastern Gulf of production areas before making landfall on the coast of Alabama or Mississippi.
Fay is the third storm of the 2008 Atlantic hurricane season to threaten U.S. offshore oil and natural gas production.
The two previous storms had only temporarily shut fractions of offshore production and did not outweigh geopolitical factors or the U.S. economic outlook in determining oil and refined products prices.
Russia announced it would begin withdrawing forces from Georgia on Monday after a war that dealt a humiliating blow to the Black Sea state and raised fears for energy supplies to Europe.
Crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11, as growing global economic problems and high fuel prices have cut demand in top consumer the United States as well as Europe.
OPEC member Venezuela said on Friday that oil market fundamentals were in "perfect equilibrium" and there was no need to vary OPEC output.
"We don't believe there's a need to place additional volume on the market," Oil Minister Rafael Ramirez told Reuters in the capital of Paraguay, where he attended the swearing in of Paraguay's new president.
In Nigeria, 12 Nigerian militants and a naval officer were killed in a gun battle on Friday near a Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) natural gas plant in the oil-producing Niger Delta, military and security forces said.
But analysts said a rising U.S. dollar and news that Russia would begin withdrawing its troops from Georgia, a key supply route from the Caspian to Europe, could potentially limit oil's gains.
U.S. light crude for September delivery was up $1.30 to $115.04 a barrel by 0714 GMT. The contract settled down $1.24 at $113.77 a barrel on Friday, after dipping to $111.34, the lowest level since May 1.
London Brent crude for October rose $1.38 to $113.93.
"The storm threat is the main driver here," said Gerard Burg, a commodities analyst at the National Bank of Australia in Melbourne.
"Oil prices also fell to the lower end of the recent trading range on Friday, so some traders in the market probably saw that as a buying opportunity."
Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) and Marathon Oil Corp (MRO.N: Quote, Profile, Research, Stock Buzz) have pulled non-essential workers from the eastern and central Gulf of Mexico due to the storm threat, but offshore production was unaffected, the companies said on Sunday. ID:nN17460141
On Sunday local time, Fay was expected to avoid most of the offshore production areas in the Gulf and instead strike the Gulf Coast of Florida on Tuesday or Wednesday, the U.S. National Hurricane Center forecast.
Some computer models, however, predict Fay may enter eastern Gulf of production areas before making landfall on the coast of Alabama or Mississippi.
Fay is the third storm of the 2008 Atlantic hurricane season to threaten U.S. offshore oil and natural gas production.
The two previous storms had only temporarily shut fractions of offshore production and did not outweigh geopolitical factors or the U.S. economic outlook in determining oil and refined products prices.
Russia announced it would begin withdrawing forces from Georgia on Monday after a war that dealt a humiliating blow to the Black Sea state and raised fears for energy supplies to Europe.
Crude has fallen sharply since reaching an all-time high of $147.27 a barrel on July 11, as growing global economic problems and high fuel prices have cut demand in top consumer the United States as well as Europe.
OPEC member Venezuela said on Friday that oil market fundamentals were in "perfect equilibrium" and there was no need to vary OPEC output.
"We don't believe there's a need to place additional volume on the market," Oil Minister Rafael Ramirez told Reuters in the capital of Paraguay, where he attended the swearing in of Paraguay's new president.
In Nigeria, 12 Nigerian militants and a naval officer were killed in a gun battle on Friday near a Royal Dutch Shell (RDSa.L: Quote, Profile, Research, Stock Buzz) natural gas plant in the oil-producing Niger Delta, military and security forces said.
