Oil prices jumped above $75 a barrel on Tuesday after a top US hurricane forecaster called for a busy end to the Atlantic storm season, raising concerns over potential disruptions to oil and gas production. US crude settled up $1.04 at $75.08 per barrel, after trading as high as $75.25. London Brent crude rose 51 cents to $73.92 a barrel.
Hurricane Felix slammed into Central America on Tuesday, sparing oil and gas installations in the Gulf of Mexico. But forecasters at Colorado State University said the rest of the 2007 Atlantic hurricane season would be busy, with a total of 15 named storms.
The US and Mexican oil sectors have escaped major storm damage so far this year, but markets have remained on edge after hurricanes knocked out refining and offshore production facilities in 2005.
Oil prices, which were closing in on the US record high of $78.77 struck on August 1, also drew support from comments from some Opec members that the producer group is likely to keep output levels unchanged when it meets on September 11.
"While the threat posed by Felix has receded, with the hurricane set to pass south of oil production facilities in the Gulf of Mexico, concerns over Opec's behaviour persist and are likely to intensify ahead of Opec's gathering next Tuesday," Barclays Capital said in a report.
But a source within the Organisation of Petroleum Exporting Countries said on Tuesday the cartel could boost output by up to 1 million barrels per day later this year - when some analysts forecast supply could have trouble keeping up with demand. "If things stay as they are, I believe, we need to increase by 500,000 barrels per day to 1 million bpd," said the source, who declined to be identified by name.
"Perhaps in December, depending on the stocks." Opec kept output flat in August, according to a Reuters survey. The group agreed last year to cut output by 1.7 million bpd. The only member suggesting the possibility of an imminent supply boost was Indonesia, Opec's second smallest producer.
"If current high prices are due to inadequate supply, then we will propose current production level increase," Indonesia's Opec governor Maizar Rahman told Reuters on Tuesday.
A Reuters poll of analysts forecast that US oil inventory data to be released by the government on Thursday would show crude stocks down 400,000 barrels, distillate stocks up 1 million barrels and gasoline stocks off 1.5 million barrels.