Oil Rises on Lower Inventories; Gustav May Strengthen

Oil prices rose more than $2 to top $119 a barrel Wednesday following a report that inventories declined last week, Bloomberg reported.

Meanwhile, weather forecasters said Tropical Storm Gustav could strengthen back into a hurricane in the next day or two and potentially threaten the Gulf of Mexico’s oil production, Bloomberg said.

Crude inventories fell 180,000 barrels last week, the Energy Department said in its weekly report. Analysts had forecast a gain of 1.1 million barrels, Bloomberg reported.

Distillate inventories, which include diesel, rose 57,000 barrels, while gasoline stockpiles fell 1.2 million barrels, DOE said.

Gustav was downgraded early Wednesday from a hurricane but was projected to move into the Gulf of Mexico this weekend and could make landfall on the Louisiana coast on Monday, according to the National Hurricane Center’s Web site.

Forecasters said the storm, which first became a hurricane Tuesday, could again become hurricane once it hits warmer water after brushing Haiti and Cuba, news reports said.