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NEW YORK : World oil prices surged higher on Wednesday amid fears that stormy weather could threaten key US energy facilities in and along the Gulf of Mexico, traders said.
New York's main futures contract, light sweet crude for delivery in September, closed up 95 cents at 73.33 dollars per barrel. The contract had earlier jumped as high as 74.23 dollars.
In London, the price of Brent North Sea crude for September delivery settled up 1.13 dollars at 71.64 dollars per barrel.
Traders eyed potential disruption to US oil facilities as two tropical storms built in the Atlantic ocean and the Gulf of Mexico.
Tropical storm Dean, now located off the northeast coast of Brazil and headed in the direction of Jamaica and the Gulf of Mexico, could turn into the Atlantic season's first hurricane tomorrow, the US National Hurricane Centre said.
Meanwhile, tropical storm Erin - previously called tropical depression five - was mounting in the western part of the Gulf of Mexico and headed directly for the Texas coast.
"Providing support to prices is evidence that the 2007 Atlantic hurricane season has finally started with markets closely watching the developments of Tropical Storm Dean and the forming of Depression Five in the Gulf of Mexico," said Barclays Capital analyst Kevin Norrish.
"While there is no guarantee at all that the two systems will develop into damaging hurricanes, they certainly can bear an important psychological impact, serving as a tangible reminder of what is forecast to be a very active
hurricane season."
The Atlantic hurricane season has been very quiet since it began on June 1, but experts point out that cyclonic activity typically peaks between August and October.
The US government's Climate Prediction Centre predicted last week that between 13 and 16 tropical storms were expected to form in the Atlantic basin this year, with seven to nine becoming hurricanes.
"The oil market went from worrying about the swirling financial storm to worrying about the development of a potential tropical storm," said Alaron analyst Phil Flynn.
"Any storm that slows refining and production will not be welcome."
Also on Wednesday, the US Department of Energy revealed that US crude inventories had slumped by 5.2 million barrels last week - more than double a fall of 2.5 million forecast by analysts.
The decline in inventories also stoked prices higher, traders said. - AFP/de
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