New York’s main oil futures contract, light sweet crude for September delivery, gained 74 cents to $US114.51 a barrel after closing down $US1.24 at $US113.77 on Friday at the New York Mercantile Exchange.
Brent North Sea crude for October delivery gained 85 cents to $US113.40. The contract dropped $US1.13 to settle at $US112.55 on Friday in London.
“Tropical Storm Fay poses some risks to the oil and gas production in the Gulf,” said Victor Shum of energy consultancy Purvin and Gertz in Singapore.
“So the storm has lent some support to pricing,” he said.
Mr Shum said that in addition to price support from storm worries, some buying today resulted from the market’s being “a bit oversold” on Friday.
Prices fell at the end of last week after the OPEC cartel lowered its forecast for oil demand growth, citing the weak global economy.
The Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world’s oil, revised its global demand growth forecast for 2008 down to 1.17 per cent from 1.20 per cent previously.
Mr Shum said any gains from worries over weather in the Gulf of Mexico will be limited by concerns that the European and Japanese economies are following the US lead in a slowdown.
But he said price rises would be capped by the strengthening US dollar, which reduces demand for dollar-priced goods because they become more expensive for buyers with weaker currencies.
Official data showed last week that the 15-nation eurozone economy shrank 0.2 per cent in the second quarter, the first contraction since the creation of the single European currency in 1999.
Japan said last week its economy contracted in the second quarter. Falling exports and weak consumer spending sent Asia’s largest economy hurtling toward its first recession in six years.
World oil prices have fallen heavily from record highs above $US147 in early July.
