Crude oil increases on Gulf of Mexico storm threat

Crude oil rose for a third day on forecasts Tropical Storm Gustav will strengthen as it enters the Gulf of Mexico, home to 26 percent of US production.

Gustav is expected to return to hurricane status before reaching Gulf platforms, according to Jim Rouiller, a senior energy meteorologist with Planalytics Inc, a forecaster based in Pennsylvania. US gasoline inventories probably fell a fifth week, dropping 2.45 million barrels, according to a Bloomberg survey.

"The threat of storms like Gustav will prevent oil prices falling further, so we see the market supported above $110 until the end of the hurricane season," said Ingrid Angermann, an economist at Dresdner Bank AG in Frankfurt.