LONDON – World oil prices rose on Tuesday as Hurricane Ivan (search) charged toward the oil-rich Gulf of Mexico (search), where energy companies evacuated thousands of offshore workers and halted some production.
U.S. light crude climbed 55 cents to $44.42 a barrel on the New York Mercantile Exchange (search). London's Brent crude rose 61 cents to $41.67 a barrel.
Ahead of OPEC's Wednesday meeting in Vienna, Saudi Arabia's oil minister said the cartel was maintaining high production to keep up the pressure on prices, but added that the group may be reluctant to rubber-stamp extra supplies by lifting official output limits.
Risking a counter-seasonal fourth quarter build in world crude stocks, OPEC's leading producer is pumping more than a million barrels daily over its official cartel quota.
Asked whether Riyadh would be content to see prices at $40 a barrel, Saudi Oil Minister Ali al-Naimi said: "No, $40 is not low enough ... the fundamentals do not support this price and OPEC does not support this price."
Traders focused on news of Hurricane Ivan, one of the fiercest Atlantic storms on record, which was heading into the Gulf of Mexico on Tuesday, home to about a quarter of U.S. oil and gas output.
"The movement of Hurricane Ivan has dominated short-term prices," wrote analysts at Barclays Capital.
"At this stage, Ivan is not expected to directly hit the bulk of oil and gas production but with the supply chain so tight, any possible disruption is having a price impact."
Shell Oil Co. closed nearly 450,000 barrels per day (bpd) of oil output and ChevronTexaco (CVX) and ExxonMobil (XOM) also shut some production and prepared to shut refineries, as companies evacuated more than 3,000 workers as a precaution.
Although Ivan is expected to leave most of the U.S. Gulf oil facilities unscathed, relatively low fuel stocks in the world's biggest energy consumer has left traders nervous about any hiccup in the supply chain.
U.S. government data has shown that national crude stocks have fallen more than six percent in the past two months to the lowest level since March.
Heating oil and distillate demand has also driven the market up in the past few weeks.
On Tuesday the London simple Brent/gas oil crack spread — an indication of refinery profits — rose to about $10.80 per barrel from around $10.40 the session before, as gas oil rose 1.75 percent to $392 per ton.
Support for the market was also underpinned by another sabotage attack on a pipeline in northern Iraq that halted crude exports to the Turkish Mediterranean port of Ceyhan.
Saboteurs blew up an oil pipeline, knocking out the 200,000-300,000 bpd of crude exports from the northern Kirkuk oilfields.
Sabotage on Iraqi oil infrastructure has helped keep up fears for supply security, at a time when producers are almost fully stretched to meet roaring demand. Such fears helped push prices to record highs last month of almost $50 a barrel for U.S. crude.