Oil prices up on new storm fears

Hurricane Ivan has forced the closure of several US refineries

Oil prices rose on Thursday on worries over production shut by Hurricane Ivan and a new storm that may delay imports from entering the Gulf of Mexico.

Ivan shut eight refineries, or about 13% of US capacity, and only half restarted during the day.

Oil companies said they would not know if platforms had sustained damage until aircraft could fly over the structures.

US light crude rose 30 cents to $43.88 a barrel, while London's Brent was up 45 cents to $40.80 a barrel.

Prices spent much of the day lower, but rose later as traders continued to assess Ivan's potential damage.

Hurricane Jeanne, which battered the Dominican Republic's northern coastline, was also a concern.

"We still don't have a clear picture of when these rigs will be back up and functioning," said Kevin Kerr, at Kwest International.

"Traders are erring on the side of caution."

Opec agreement

On Wednesday, oil producers' cartel Opec had agreed to raise its production quota by one million barrels a day.

Given that Opec's daily output is already running ahead of quota, this was thought more likely to "legitimise" the existing over-production than lead to any extra barrels in the market.

With Opec producers pumping at close to maximum capacity, traders say there is no great shortage of crude oil supply.

Prices are highly sensitive to any development that could reduce supplies.

Last month, the threat of supply disruptions in Iraq and Russia drove US crude prices to a 21-year high, just short of $50 a barrel, prompting fears that higher energy costs would dent global economic growth.

In the US, eight refineries in Louisiana and Texas were fully closed ahead of Hurricane Ivan's arrival on land on Thursday morning. A further four were partially closed.

The affected refineries account for 13% of US refining capacity.