Oil prices jumped more than $1 on Wednesday after the US government said up to 15 percent of the nation's storm-battered refining capacity could stay shut for weeks, rekindling fears of fuel shortages.
Strikes in France, a leading US gasoline supplier, could worsen the problem by hurting Europe's ability to send shipments across the Atlantic, with the biggest French refinery already shut down by a work stoppage.
"The longer these refineries remain shut down, the more serious the situation becomes, particularly with the heart of the winter season just a few months away," the US Energy Information Administration said in a report about the storm-struck US petroleum infrastructure.
US crude on the New York Mercantile Exchange settled up $1.28 at $66.35 a barrel, tracking a spike in gasoline futures of 17.29 cents to $2.3393 a gallon. London Brent crude gained 96 cents to $63.93.
"The rest of the market, gasoline and heating oil, is carrying crude at the moment," said Mike Fitzpatrick, vice president for energy risk management at Fimat USA.
US data Wednesday showed gasoline stockpiles in the world's biggest consumer rose unexpectedly last week due to strong imports and flagging demand, but analysts said the numbers did not reflect Hurricane Rita's full impact on fuel production. "The full effect will be next week," said Larry Alverson, an analyst with the EIA, adding that refining operations and fuel supplies would likely fall.
Rita, the second major storm to strike at the heart of the US energy industry in a month, left some 18 percent of US refinery capacity paralysed as of Wednesday, according to a Reuters survey.
In France, work stoppages crippled Total's Gonfreville plant, and unions threatened to extend the strike to all Total facilities, putting over half of France's gasoline and heating oil output at risk.
A blockade by French shipping workers has stopped oil tankers from discharging at the Fos-Lavera port near Marseilles, which feeds many other refineries. If the strike drags on, refiners will run out of crude oil to process.
"The strikes may further constrain Europe's already limited ability to export product across the Atlantic," said Kevin Norrish, an analyst at Barclays Capital.
Analysts at Refco said the disruption would "hamstring efforts to build up distillate stocks ahead of the Northern Hemisphere winter."
Gasoline has been in tight supply for some time, and US President George W Bush took the unusual step this week of asking American motorists - the world's biggest users - to conserve fuel.
"Gasoline is the most sensitive to the refinery outages at the moment," said Mark Keenan of commodities fund MPC.
Crude prices are below their August 30 record of $70.85, hit shortly after Hurricane Katrina struck the Gulf of Mexico oil region, but in real terms they are still at levels unseen since 1980, the year after the Iranian revolution.
A Saudi official said on Tuesday the world's biggest oil exporter might pump less crude in October because some of its refinery customers could not process the oil.
The US stock figures showed gasoline inventories unexpectedly rose 4.4 million barrels last week on high imports and lower demand.
Distillates stocks dropped 232,000 barrels, less than projected, while crude stocks fell a bigger-than-expected 2.4 million barrels as Hurricane Rita curtailed the offloading of imports.