Oil prices rise as Hurricane Gustav nears Gulf

By MADLEN READ

NEW YORK (AP) — Oil prices swung higher Tuesday as Hurricane Gustav struck Haiti, raising concerns that the storm could slam into major oil operations in the Gulf of Mexico.

However, the price rise was tempered by a stronger dollar and a report from the Energy Department showing even slower fuel demand than many traders thought.

After dropping as low as $112.36 per barrel in overnight trading, light, sweet crude for October delivery ended the day up $1.16 to settle at $116.27 a barrel on the New York Mercantile Exchange.

If Gustav continues along a path toward the Gulf, it could mean an uptick in gas station prices ahead of Labor Day weekend.

James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com, said he expects pump prices to edge up about 10 cents between now and Labor Day as refiners add a hurricane premium to wholesale prices.

"Everything about this looks like a strong storm that would evacuate platforms," Cordier said.

The average U.S. retail price for gasoline on Tuesday was $3.672, according to auto club AAA, Oil Price Information Service and Wright Express. That is down about a penny from Monday, and down nearly 11 percent from the record $4.114 reached July 17 — just a few days after crude hit an all-time high above $147 a barrel.

Oil prices rise as Hurricane Gustav nears Gulf....