Oil climbs above US$88 per barrel as storms cut production in Gulf of Mexico

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By Chris Kahn, The Associated Press  | September 07, 2011

NEW YORK, N.Y. - Oil is surging on the expectation that tropical storms will hamper oil production in the Gulf of Mexico.

Benchmark West Texas Intermediate crude on Wednesday jumped US$2.61, or three per cent, to $88.63 per barrel in New York. Brent crude climbed $1.69 to $114.58 in London.

The government reported late Tuesday that Tropical Storm Lee forced 131 oil platforms to evacuate, cutting production by 847,000 barrels per day. That's about 4 per cent of the oil that the U.S. consumes every day.

Traders are now watching a tropical depression in the Atlantic. It's still 3,000 miles away, but analysts are betting it will be the next of many storms to hamper production this hurricane season.

Gasoline pump prices were little changed on Wednesday at a national average of $3.657 per gallon.