The price of crude rose to near $104 a barrel Friday as offshore oil rigs in the Gulf of Mexico braced for Tropical Storm Karen.
By early afternoon in Europe, benchmark oil for November delivery was up 54 cents to $103.85 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 79 cents to close at $103.31 on Thursday.
Several oil companies operating in the Gulf of Mexico, including Exxon, said they were taking precautionary measures, including the evacuation of non-essential personnel from offshore installations in the path of the tropical storm that could turn into a weak hurricane over the weekend.
“Some 20 per cent of U.S. oil production is sourced from the Gulf of Mexico,” analysts at Commerzbank in Frankfurt said in a report. “Oil prices should ease again as soon as this temporary support disappears.”
The potential disruption comes amid the budget impasse in the U.S. Some 800,000 federal workers and scores of agencies were idled this week after a sharply divided U.S. Congress failed to agree on short-term funding for the government to pay its bills beyond Monday, when the fiscal year ended.
Markets initially took the passing of the deadline and the partial shutdown of nonessential government services in stride. But investor anxiety has gradually risen as the budget impasse between Republicans in the House of Representatives and the White House drags on.
A prolonged halt to government activities would reduce demand for energy and result in lower prices of fuels such as gasoline. That would be a boon for drivers but also signal a weak economy.
Brent, the benchmark for international crudes, was up 58 cents to $109.58 on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
— Wholesale gasoline added 0.43 cent to $2.6439 per gallon.
— Natural gas rose 1.1 cents to $3.51 per 1,000 cubic feet.
— Heating oil advanced 0.61 cent to $3.0094 per gallon.