(RTTNews) - Crude oil pared much of an early on Wednesday but remained moderately higher. October crude oil climbed to $116.91, up 64 cents on the session. Prices reached as high as $119.63 in the early going as Tropical Storm Gustav heads towards the Gulf of Mexico.

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.

Traders considered the Department of Energy's mixed bag inventory report. Crude oil inventories decreased by about 170,000 barrels in the week ended Aug. 24. Analysts were expecting to see a build of about 1 million barrels. At 305.8 million barrels, U.S. crude oil inventories are in the middle of the average range for this time of year.

Meanwhile, gasoline inventories decreased by 1.2 million barrels last week, and are below the lower boundary of the average range. Market players were expecting a drop of about 2.8 million barrels.

Oil prices surged on Tuesday, adding $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 Wednesday, 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.

For comments and feedback: contact editorial@rttnews.com

Copyright(c) 2008 RealTimeTraders.com, Inc. All Rights Reserved