Gas pumps are seen at a petrol station in Prague May 10, 2012.
(Photo : Reuters/David W Cerny)
Brent crude edged up in choppy trade on Tuesday, while U.S. crude pushed higher as Hurricane Isaac churned in the Gulf of Mexico, forcing companies in the region to close down oil production platforms and refineries.
Isaac strengthened into a hurricane just off the U.S. Gulf Coast and was expected to reach the coast of Louisiana late on Tuesday.
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U.S. President Barack Obama warned Gulf Coast residents that there could be significant flooding from Isaac, but in an appearance on television did not mention any potential release of Strategic Petroleum Reserves.
A White House spokesman said later that the option of tapping reserves remained on the table, "but we have no announcements to make today.
Brent and U.S. crude futures slipped ahead of Obama's statement on the possibility a release would be announced and, separately, on a report showing weakened U.S. consumer confidence.
"Seemed to be some misplaced expectations of a release announcement and prices bounced back some after he didn't mention the reserves," said John Kilduff, partner at Again Capital LLC in New York.
Brent October crude rose 19 cents to $112.45 a barrel at 1:39 p.m. EDT (1739 GMT), having fallen to $111.71, putting the 200-day moving average of $111.45 in sight. Brent's session peak was $113.10.
U.S. October crude was up 77 cents at $96.24 a barrel, having reached $96.54, just under the 200-day moving average of $96.73.
Gulf Coast refiners shut about 1.32 million barrels per day (bpd) of capacity, pressuring crude futures on Monday on expectations that refinery crude oil needs will be lower and that Isaac, a weaker storm than the 2005 Hurricane Katrina, will do less damage to offshore production.
"The wave heights are much lower (than Katrina) so we expect less damage," said Tom Larsen, senior vice president of disaster modeler Eqecat Inc.
U.S. heating oil futures seesawed and gasoline futures fell more than 4 cents on Tuesday. Gasoline was hit by profit taking after settling more than 7 cents higher on Monday.
Front-month September heating oil and gasoline contracts expire on Friday.
Gulf Coast cash gasoline differentials fell sharply from Monday's premiums to benchmark October RBOB futures as fewer Louisiana refineries than expected fully shut down ahead of Isaac's landfall, traders said.
IEA CHIEF: RESERVES RELEASE UNNECESSARY
The head of the International Energy Agency on Tuesday reiterated her opposition to a reserves release.
Maria van der Hoeven, the Dutch executive director of the agency that represents 28 energy importing countries, said higher oil prices alone did not justify a release and world oil markets could cope with the loss of Iranian exports, hit by U.S. and European sanctions against Tehran.
On Friday, a source and an oil trade journal indicated that the IEA had dropped its resistance to a U.S.-led plan for a release.
Ahead of weekly reports on U.S. oil inventories, crude oil and refined products stockpiles were expected to be lower, a Reuters survey of analysts on Monday showed.
With the threat from Tropical Storm Isaac in the spotlight on Tuesday, investors also awaited a gathering of central bank officials in Jackson Hole, Wyoming, and Friday's speech by U.S. Federal Reserve Chairman Ben Bernanke, hoping for indications about more monetary stimulus.
The Fed meeting will be followed by the European Central Bank's policy meeting on September 6 and the German Constitutional Court's ruling on the euro zone's permanent bailout fund on September 12, which clarify the ECB's bond-buying plans.
Additional stimulus from the Fed is expected to pressure the dollar, increasing demand for dollar-denominated commodities like oil and causing prices to rise.