Oil fuelled by fresh storm fears

Dennis hit production at hundreds of rigs in the Gulf of Mexico

The price of oil shot back above $60 a barrel on Tuesday on fears that a new tropical storm in the Gulf of Mexico could halt production.

Tropical Storm Emily has the potential to become a hurricane soon, weather forecasters warn, and it could hit the US mainland early next week.

The news made the market jittery again only days after the industry escaped the worst of Hurricane Dennis.

US light, sweet crude closed $1.70 higher at $60.62

Meanwhile, London Brent crude gained $1.38 to end at $58.82.

The Gulf of Mexico provides 30% of US oil output, and production from the region is vital at a time when supplies are tight and energy firms are stocking up ahead of the autumn demand for heating oil.

Supply threat

The latest oil price rally "is indicative of the nervousness in the market regarding the potential supply threat", said one industry analyst.

The US Department of Energy will release its closely watched data on US oil supplies on Wednesday.

Oil workers were evacuated from the Gulf of Mexico on Friday as Hurricane Dennis gathered pace, leading to a production loss of about 4 million barrels a day over the 8-11 July period.

And UK giant BP said it new oil platform Thunder Horse had been listing but that there had been no leaks or injuries.

Hurricane Dennis ripped across Cuba and Haiti, killing at least 27 people, before coming ashore in the US.

At least four people are reported to have died in the US, where Florida, Mississippi and Alabama have been declared disaster zones.

About 1.4 million people were evacuated ahead of its arrival in the US.

The storm has since lost some of its power and has been downgraded to a tropical depression.