Oil price above $83 on storm fears

Oil traded above $83 a barrel in Asia today as dealers watched a new storm developing in the Gulf of Mexico, which could impact oil production, dealers said.

New York's main futures contract, light sweet crude, was 46 cents higher at $83.34 a barrel for November delivery in late morning trade.

The contract had surged $2.58 to $82.88 in late US trades yesterday, when it edged closer to the all-time intra-day high of $84.10.

Brent North Sea crude for November delivery was at $80.45, up 42 cents after breaching the $80-level for the first time in London, where the contract soared $2.60 yesterday.

Tensions in the market were heightened on news that a storm developing in the Gulf of Mexico could affect oil production facilities, analysts said.

According to the US National Hurricane Centre, a tropical depression was heading toward the coast of Mexico and could become a tropical storm.

The Gulf of Mexico is a leading oil-producing region for the US and Mexico and investors are worried that, during the long Atlantic hurricane season that ends in November, a storm will damage oil rigs and other infrastructure.

"I think the storm sort of got people on edge," said Jason Feer, Asia Pacific vice-president and general manager of energy market analysts Argus Media, in Singapore.

He said that while US crude stocks have been building, refinery run rates have dropped.

"That sort of indicates there's a potential bottleneck" heading into the North American winter when demand for heating oil picks up.