Oil prices surged nearly $2 on Tuesday as relief that Hurricane Dennis had passed without major disruption to US offshore oil infrastructure gave way to concern about a new Atlantic storm. US light sweet crude for August delivery settled up $1.70 to $60.62 a barrel, after coming within a dollar of the record $62.10 posted last Thursday. London Brent crude gained $1.38 to $58.82.
The contracts had fallen on Monday after companies expressed confidence that Gulf of Mexico output would swiftly return to normal, following shut-ins because of the hurricane.
"There was no big damage after Hurricane Dennis but people are looking at the next one," said Tetsu Emori, chief commodities strategist at Mitsui Bussan Futures. "People are quite nervous and doing some short-covering."
The National Hurricane Center in Miami said Tropical Storm Emily, the fifth major storm this season, had developed late on Monday. It was still far out in the ocean and several days away from posing a threat to any inhabited areas, the center added.
Hurricane Dennis forced the cumulative shut-in of four million barrels of oil and more than 18 billion cubic feet of gas, the US Mineral Management Service said.
Before Dennis, Tropical Storm Cindy also forced offloading of imports to be suspended.
A Reuters survey of analysts predicted the disruptions would be reflected in US data for release on Wednesday. The survey forecast the data would show a 3.5 million-barrel fall in crude inventories.
Refineries continued to operate at breakneck speed, although storm-related shut-ins could have eased run rates slightly, the analysts said.
They predicted a 1.6 million-barrel build in distillate stocks, the eighth increase in as many weeks, and an 800,000-barrel fall in gasoline stockpiles.
The Opec cartel has pledged to boost output if needed but said demand for its mostly sour, hard-to-refine crude has not been encouraging. Its production is running nearly at a 25-year high.
Bearish signals on demand continued to emerge from China, the world's second-biggest oil consumer after the United States.
In the latest indication on Tuesday, an economic think-tank forecast China's economic expansion to slow with full-year growth was seen at 8.8 percent, significantly lower than the 9.5 percent seen last year, the China Securities Journal reported.
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