Oil leaps as US lifts price forecast

Crude futures briefly jumped more than $2 a barrel yesterday after the Energy Department raised its oil-price forecast by $6 a barrel and as traders remain worried that summer storms in the Gulf of Mexico could curtail petroleum output.

The Energy Department, which oversees US supply and demand statistics, said yesterday that it expects oil prices to average $59 a barrel through September, up from its estimate of $53 a barrel a month ago.

While the impact of Hurricane Dennis was not as bad as originally feared -- even with BP reporting that one of its offshore platforms was listing -- traders are keeping an eye on freshly brewing Tropical Storm Emily.

Adding to bullish sentiment were expectations that today's inventory snapshot from the US government would show a decline in crude oil inventories.

''People seem to have taken the consistent view that the US statistics are always bullish and markets respond accordingly every week," said Julian Lee, energy analyst with the London-based Center for Global Energy Studies.

After briefly surging past $61 a barrel, light sweet crude for August delivery climbed $1.70 to $60.62 a barrel yesterday on the New York Mercantile Exchange.

Heating oil futures climbed 6.97 cents to $1.7515 a gallon, while gasoline futures rose 3.89 cents to $1.771 a gallon. On London's International Petroleum Exchange, August Brent was up $1.38 to settle at $58.82 a barrel.

Many oil production facilities had shut down prior to Hurricane Dennis's arrival, briefly shutting in production of oil and natural gas. The US federal Minerals Management Service said that more than 4 million barrels of oil and 18 billion cubic feet of natural gas were shut in between Friday and Monday, less than 1 percent of the region's annual output.