New York crude oil prices stretched as high as US$120.50 per barrel on Thursday as traders eyed stormy weather in the Gulf of Mexico, where many US energy facilities are located.
After breaching US$120, prices closed sharply lower as traders discounted the threat of Tropical Storm Gustav.
But they moved higher again on Friday ahead of a three-day holiday weekend in the US. About a quarter of US crude oil installations are located in the Gulf of Mexico.
“The focus is likely to remain on Tropical Storm Gustav and potential supply disruptions during the weekend and earlier next week,” Sucden analyst Andrey Kryuchenkov said.
As Gustav advanced, oil companies were pulling employees off installations.
Royal Dutch Shell PLC has evacuated nearly 670 workers. The company said production will be affected. BP PLC was also removing personnel from the region, while Exxon Mobil said it was bracing its structures for heavy wind and rain.
Transocean Inc, the world’s largest offshore drilling contractor, said on Thursday it had evacuated about 190 workers from five of its 11 offshore drilling rigs in the Gulf. Transocean has 1,550 workers in the region.
The threat of Gustav raised grim memories of the 2005 hurricanes Katrina and Rita that damaged or destroyed about 165 oil platforms of the some 4,000 located in the Gulf.
Oil markets this week also tracked escalating tensions between Georgia and Russia, the world’s biggest oil producer.
The US, the largest energy consumer, is worried that in the wake of the Russian-Georgian conflict, US strategic interests in Ukraine and Azerbaijan — especially in oil — could be at serious risk.
The clearest sign of US concern is that US Vice President Dick Cheney will travel to Georgia, Ukraine and Azerbaijan next week, analysts said.
Despite climbing above US$120, prices are still well short of record highs above US$147 reached last month.
Light, sweet crude for October delivery fell US$0.13 to settle at US$115.46 a barrel on the New York Mercantile Exchange on Friday.
In London, October Brent crude fell US$0.12 to settle at US$114.05 a barrel.