Oil near $115 as dollar weighs

Oil hovered around $115 a barrel on Tuesday as the dollar strengthened, but losses were limited as tropical storm Gustav in the Caribbean turned into a hurricane, stoking concerns over output disruptions in the Gulf of Mexico. Also supportive were tensions between the West and Russia over Georgia and expectations that oil exporter group Opec, which meets on September 9, could trim production should prices fall further.
Crude for October delivery fell 6 cents to $115.05 a barrel by 0658 GMT, while London Brent crude was down 1 cent at $114.02 a barrel. Gustav swirled through the central Caribbean and bore down on Haiti on Tuesday, the US National Hurricane Center said. The official forecast called for Gustav to move to the north-west across Haiti and then south of central Cuba, possibly towards the Gulf of Mexico.
"I think overall the trend of the market is bearish right now, but the hurricane premium as well as the Russia-Nato premium is what's keeping the market from dropping further," said Jonathan Kornafel, Asia director at US-based options trader Hudson Capital Energy. Russia's parliament urged the Kremlin on Monday to recognise two rebel regions of Georgia as independent states, raising alarm in the West.
Oil will also watch the dollar, which climbed towards a six-month high against the euro and jumped against the Australian and New Zealand dollars on renewed jitters over the financial sector. Investors will want to see if the German Ifo survey of business sentiment shows whether the euro zone economy is weakening further, a factor that has been behind dollar gains recently.
OPEC OUTPUT Iran's oil minister said on Monday he expected Opec to work on preventing the falling trend in crude prices and also to study oversupply in the market when it meets on September 9 in Vienna. But an Opec source said the cartel is likely to keep oil output policy unchanged.
The market will turn its focus on Wednesday to US crude oil inventories, which are likely to have risen 1.4 million barrels last week, a Reuters preliminary poll showed. In the previous week, crude stocks shot up by 9.4 million barrels as crude imports rose after delivery delays caused by Tropical Storm Edouard. The poll of eight analysts showed an average forecast for a 400,000-barrel gain in distillates.