Oil prices rose Wednesday amid forecasts that the strongest storm to hit the Arabian Peninsula in 60 years was barreling toward Iran, a major oil producer, and the oil-rich Persian Gulf.
"Uncertainty about the cyclone in the Middle East is holding the crude oil futures market steady, with prices fluctuating a little as traders watch storm developments," said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.
"The latest on the storm indicates it will hit land in southeastern Iran - which could possibly disrupt shipping through the Arabian Gulf, and that's caused some concern in the trading community," he said.
Light, sweet crude for July delivery added 23 cents to US$65.84 a barrel in Asian electronic trading on the New York Mercantile Exchange, midmorning in Singapore. The contract fell 60 cents to settle at US$65.61 a barrel Tuesday.
Cyclone Gonu menaced Oman's central coast with strong winds and rain early Wednesday and forecasters said it was expected to hit land in southeastern Iran later in the day or early Thursday. The Joint Typhoon Warning Center, a U.S. military task force that tracks storms in the Pacific and Indian oceans, predicted rough seas in the Straits of Hormuz, the transport route for two-fifths of the world's oil and the southern entrance to the Gulf.
Gonu, which means a bag made of palm leaves in the language of the Maldives, is predicted to skirt the region's biggest oil installations but could disrupt shipping in the Straits of Hormuz, causing a spike in prices.
Traders were also eyeing the release of U.S. government fuel supply data later Wednesday. According to a Dow Jones Newswires survey of analysts, gasoline stocks are expected to rise by 1.5 million barrels, distillate stocks by 800,000 barrels and crude inventories by 120,000 barrels. Refinery utilization is expected to rise by 0.6 percentage point.
Heating oil futures rose 0.26 cent to US$1.967 a gallon (3.8 liters) while natural gas futures added 2.4 cents to US$8.088 per 1,000 cubic feet.