(RTTNews) - Crude oil rallied again on Wednesday as Tropical Storm Gustav heads towards the Gulf of Mexico. October crude oil climbed to $118.94, up $2.67 on the session. Prices reached as high as $119.63 in the early going.
Gustav could turn back into a hurricane later today or tomorrow. As a hurricane, Gustav reached landfall in Haiti on Tuesday afternoon, causing killer landslides. The storm is predicted to reach the Gulf of Mexico over Labor Day weekend, leading to concerns the oil supplies from the region could be disrupted.
Investors also looked ahead to the Energy Information Administration's inventory report, which is coming later this morning. Experts expect to see a build of about 1 million barrels in the recent week. Last week's data showed inventories increased by 9.4 million barrels in the week ended Aug. 15. However, motor gasoline inventories decreased by 6.2 million barrels in the week.
Oil prices surged on Tuesday as traders showed concern Hurricane Gustav could cause problems for the Gulf of Mexico's oil region. Light sweet crude for October delivery closed at $116.27, up $1.16 for the session. Prices had dropped as low as $112.36 in electronic trading, but later climbed as high as $117.89. Traders also considered a Department of Energy report that revealed lower year-over-year demand for crude oil in the month of June.
On the economic front, orders for durable goods increased by much more than expected in the month of July, according to a report released by the Department of Commerce on Wednesday, with the increase reflecting strong demand for goods meant to last for at least three years.
The report showed that durable goods orders jumped 1.3 percent in July, matching a revised 1.3 percent increase in June. Economists had been expecting a much more modest increase in orders of about 0.1 percent.
The dollar firmed up Wednesday morning upon the release of that data. The buck spiked higher versus the yen and gained a bit of ground on the euro, paring its earlier losses. Commodities generally moves opposit the dollar because of the hedge appeal.
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