The price of crude oil rose up slightly, on Monday, after a mixed day of trading. The market was split between a focus upon the OPEC meeting in Vienna - where a potential output cut is on the agenda, and Hurricane Ike - who is currently headed toward the energy-rich Gulf of Mexico.
New York's main contract, light, sweet crude for October delivery, rose 11 cents to close at $106.34 a barrel.
London’s benchmark Brent North Sea crude for October fell 65 cents to settle at $103.44 per barrel.
However, gains in the U.S. oil market were tempered after the U.S. government announced its takeover of troubled mortgage financiers Fannie Mae and Freddie Mac. The takeover fuelled a run up in the U.S. dollar.
A strong greenback tends to signal lower commodity prices by weakening the purchasing power of buyers using other currencies.
Tom Bentz, analyst at BNP Paribas, in New York, said: “The storm concerns appear to be overriding the dollar.”
Analysts also said that the trend was generally weaker for oil but that traders were particularly cautious with a new hurricane approaching.
Energy companies began shutting production down on Monday in preparation for the Hurricane’s arrival. Ike’s timing threatens to hit the U.S. offshore oil region before output even has chance to get up and running again, in the wake of Hurricane Gustav.
Leading energy producers including Shell, Conoco, Anadarko, Apache and Marathon have all reported the evacuation of their workers.
The U.S. Minerals Management Service (MMS) said 79.4% of 1.3 million barrels per day (bpd) in oil production remained shut on Monday, a slight decline from the day before.
As a quarter of domestic crude and 15% of natural gas production lies out of operation, the combination of the two storms will surely hit U.S. energy inventories hard.
Traders are watching Ike closely and according to Darin Newsom, a senior analyst at DTN, it should be an interesting week: “As it isn't projected to make landfall until next weekend after strengthening once it gets into the Gulf.”
After making landfall in Cuba, Ike weakened from a Category 4 to a Category 2 storm, with maximum winds nearing 100 miles per hour, according to the National Hurricane Centre.
Forecasters predict that the hurricane will move into the Gulf of Mexico and hit mainland America somewhere on the coast between Texas and Alabama this coming weekend.