Oil up slightly as Hurricane Ike threatens Gulf

By Richard Valdmanis

NEW YORK (Reuters) - U.S. oil prices rose slightly on Monday as Hurricane Ike took aim at the U.S. Gulf of Mexico's cluster of offshore rigs, most of which remained paralyzed in the wake of last week's Hurricane Gustav.

The one-two punch likely will carve deeply into U.S. energy inventories, as the source of a quarter of domestic crude and 15 percent of the United States' natural gas lies dormant for a fresh blow of high winds and waves.

U.S. crude futures settled up 11 cents at $106.34 a barrel after dipping to a five-month low of $104.70. London's Brent crude futures, trading at a steep discount to the U.S. benchmark, fell 65 cents to $103.44.

Gains in the U.S. oil market were tempered after the U.S. government's takeover of mortgage financiers Fannie Mae and Freddie Mac fuelled a run up in the U.S. dollar.

A strong greenback tends to lower commodity prices by weakening the purchasing power of buyers using other currencies.

"The storm concerns appear to be overriding the dollar," said Tom Bentz, analyst at BNP Paribas in New York.

Energy companies Shell Oil, Anadarko and others began evacuating workers ahead of Ike, which struck Cuba late Sunday on a track that could take it into the Gulf of Mexico Tuesday and into the Gulf Coast by the weekend.

The Gulf of Mexico's oil production already was mostly shut down due to the effects of Hurricane Gustav, which crossed through the Gulf of Mexico just over a week ago.