Oil prices rally, Brent tops $110

Hopes for US economic growth and concerns over potential tight crude supplies and a hurricane building in the Caribbean continued to push oil prices higher Tuesday, analysts said. New York's benchmark, West Texas Intermediate crude for September delivery, climbed steadily during the session to end up $1.47 from Monday at $93.67 a barrel. It was the highest level for WTI in nearly three months. In London, Brent North Sea crude for September jumped $2.45 to a round $112 a barrel. Analysts continued to point to the buoyant US jobs report July released last Friday as a sign that the US economy might be picking up speed, spilling over into demand for fuel products. "In addition we've seen bigger-than-expected inventory drawdowns in the US recently, implying that demand for oil remains strong," said Fawad Razaqzada, an analyst at trading group GFT Markets. "The euro's recent strength has provided additional support. Geopolitical concerns in the Middle East and hurricane season in the US have kept supply concerns elevated," he added. In the Caribbean the tropical storm Ernesto strengthened into a hurricane Tuesday with winds at 80 miles an hour (130 kilometers per hour), and was headed on a track northward toward Mexico's Yucatan peninsula and its lower Gulf of Mexico oil and gas fields. But the US National Hurricane Center said the storm should turn westward and cross central Mexico, missing the crucial US oil fields further north in the Gulf. "Ernesto... at the very least will slow imports of oil into the Gulf of Mexico or shut down Mexico's offshore production," said Phil Flynn of Price Futures Group.