1 Sep 2008

Oil edges higher as Gustav draws closer

11:00 am on 1 September 2008

Oil prices edged higher in a electronic trading on Sunday as Hurricane Gustav threatens oil fields and refineries in the Gulf of Mexico.

US crude oil futures were up $US1.24 at $US116.70 a barrel at 2140 GMT.

The New York Mercantile Exchange opened trading on the CME Globex platform at 1630 GMT on Sunday, three and half hours earlier than normal, to facilitate trading before Gustav makes landfall.

Gustav is expected to arrive on the Louisiana coast on Monday morning as a Category 3 hurricane.

More than 96% of oil production in the Gulf of Mexico is now shut down. The Gulf produces approximately 1.3 million barrels per day of crude oil, roughly a quarter of US domestic output.

At least nine oil refineries are shut down and several other refineries have reduced their processing operations.