Oil may rise on supply drop

Twenty-six percent of US oil production is in the Gulf of Mexico. (F. Carter Smith/Bloomberg News)

Crude oil might rise next week on forecasts that a government report will show US inventories fell because of Hurricane Gustav.

Twelve of 28 analysts surveyed by Bloomberg News, or 43 percent, said prices will increase through Friday. Ten of the respondents, or 36 percent, said oil will decline, and six said prices will be little changed. Last week 38 percent expected futures to increase.

Gustav caused producers to shut all oil output from platforms in the Gulf of Mexico.

The Gulf accounts for 26 percent of US oil production. The Energy Department is scheduled to release its report on this week's inventories on Wednesday.

"I think that the disruptions to tanker traffic in the Gulf and refinery operations will see lower inventories, and the market will interpret this as bullish, but not very strongly so," said Michael Lynch, president of Strategic Energy & Economic Research in Winchester.

Crude oil for October delivery dropped $1.66 to $106.23 to $106.23 a barrel yesterday on the New York Mercantile Exchange, the lowest since April 4.