Oil Prices Rise As Traders Watch Storm
Natural gas futures eased slightly after a heat-induced surge in electricity demand pushed them sharply higher a day earlier.
"We're moving into a very strong seasonal trend" for energy prices to move higher, said Societe Generale commodities analyst Mike Guido.
Light sweet crude for September delivery rose 35 cents to $74.75 a barrel on the New York Mercantile Exchange, where gasoline futures jumped by more than a nickel to $2.2625 a gallon.
Natural gas futures slid 17 cents to $8.04 per 1,000 cubic feet. On Monday, natural gas futures surged 14 percent to settle at $8.211, the highest close since early February.
Nymex trading was halted for a half hour, beginning at 11 a.m., for a fire drill.
In London, September Brent crude rose 32 cents on the ICE Futures exchange, to $75.47 a barrel.
The U.S. National Hurricane Center said Tropical Storm Chris has formed near the Leeward Islands in the Caribbean, raising traders' fears that it could strengthen and damage oil platforms and refineries along the Gulf Coast.
"In the back of everybody's minds is the possibility of getting one or two hurricanes like Katrina, or like Rita," said Cameron Hanover Inc.'s Peter Beutel. Those storms disrupted oil and natural gas output, as well as oil refining, for months, forcing the U.S. to import large amounts of fuel from Europe.
In the Middle East, there were few signs of a quick resolution to the escalating conflict. Israel decided Tuesday to widen its ground offensive and Israeli fighter jets struck suspected Hezbollah positions deep inside Lebanon for a second straight day.
Oil traders have been focused for nearly three weeks on the violence between Israel and Hezbollah guerrillas in Lebanon, fearful of possible supply interruptions in the region. Iran, OPEC's No. 2 supplier, is a backer of Hezbollah and is in the midst of a diplomatic standoff with the United Nations over its nuclear program.
On Tuesday, Iran President Mahmoud Ahmadinejad rejected a U.N. Security Council resolution that would give his nation until Aug. 31 to suspend uranium enrichment.
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