Oil Rises as Gustav Storm Intensifies

Oil prices, which got an early lift Wednesday thanks to Tropical Storm Gustav, continued to rise after a weekly government report revealed a surprise drop in U.S. crude supplies.

The Energy Information Administration reported stockpiles fell by 100,000 barrels to 305.8 million barrels for the week ended Aug. 22. Analysts were expecting an increase.

The price of light, sweet crude for October is trading up $2.03 at $118.30 on the New York Mercantile Exchange. The U.S. Oil Fund (USO Quote - Cramer on USO - Stock Picks), an exchange-traded fund that tracks the commodity, was rising 1.5% at $95.26.

Gustav is heading toward the Gulf of Mexico, prompting investor fears the storm could again intensify to hurricane level and disrupt oil supplies in the region. Royal Dutch Shell (RDS.A Quote - Cramer on RDS.A - Stock Picks) and Transocean (RIG Quote - Cramer on RIG - Stock Picks) have begun evacuating offshore rigs in the area, according to Reuters.

In other news, ConocoPhillips (COP Quote - Cramer on COP - Stock Picks) announced a deal to sell its remaining U.S. gas and convenience store retail properties to a subsidiary of PetroSun Fuel. The sale is part of a planned disposition of assets. Conoco share were up 1.3% at $83.48.