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     Sept. 1 (Bloomberg) -- Crude oil and gasoline rose in New York as Hurricane Gustav approached the U.S. Gulf coast, forcing the closure of refineries and evacuation of offshore rigs.

Crude oil for October delivery rose as much as $2.54, or 2.2 percent, to $118 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $116.36, up 0.8 percent, at 1:36 p.m. in Singapore. Prices, which dropped 7 percent in August, are up 22 percent this year.           

Gulf Coast refineries have cut at least 1.56 million barrels a day of production, about 9.8 percent of the U.S. total. Eight refineries have announced shutdowns, while a further five have reduced capacity.    

Chesapeake Energy Announces Haynesville Shale Joint Venture

Analysts are raising target prices for Chesapeake Energy (NYSE CHK) following the announcement of a joint venture with Plains Exploration and Production Company to produce gas in the Haynesville shale region.

Wachovia Capital Markets analyst David Tameron called the deal a "brilliant transaction," and "a prudent, home run deal, and serves as a reminder why Chesapeake's management is often so highly regarded by the Street."

Stifel Nicolaus & Co. analyst Michael A. Hall raised his target price on Chesapeake Energy to $82 from $74.

Oil Hits Record High

Light, sweet crude for August delivery gained $2.60 to close at a record $143.57 a barrel on the New York Mercantile Exchange.

The Energy Department reported that crude oil inventories decreased by 2 million barrels last week.  Analysts were forecasting a decline of roughly 1.2 million barrels.

In contrast the EIA numbers on gasoline showed an increase of 2.1 million barrels.  This number was larger than analyst forecasts and signals a reduced demand for gasoline by American drivers.

Gasoline inventories posted a decline of 100,000 barrels in the previous week.

          Oil closed at a record $143.57 on Wednesday.

EIA: World Experiencing "Oil Shock"

International Energy Agency head Nobuo Tanaka states that the world is in the grip of an "oil shock."

In its annual Medium Term Report, EIA said the world's estimated daily oil needs would rise from 86.87 million barrels this year to 94.14 million barrels in 2013.  This is less than it anticipated in its 2007 report due to record high prices.

"We are clearly in the third oil price shock," declared Tanaka, comparing the effects of pricey petroleum now to periods of soaring prices in the 1970s and 1980s.
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OPEC's Secretary General Abdalla Salem el-Badri states that an interest rate increase by the US Federal Reserve would strengthen the US Dollar,rein in speculation, and possibly push oil prices under one hundred dollars per barrel.

"People will go and invest somewhere else," if the Fed opted to raise rates, el-Badri said. "I'm sure the price will come down," he added, sanguine about the pace and degree of any downturn in prices.

"We don't prefer $137 (a barrel) today and $10 tomorrow. Whether it's $80, $ 90, $110, whatever, that price should reflect supply and demand fundamentals," el-Badri said. continued.......

Qatar Will Not Increase Crude Oil Production

Qatar's oil minister states that the country will not follow Saudi Arabia's lead in increasing oil production, claiming that supplies are adequate. 

``I never heard any panic about a shortage of supply, just about the high price,''  Abdullah bin Hamad al-Attiyah told Bloomberg in an interview in Madrid. ``We see in the market there are lots of cargoes.''

Qatar joins United Arab Emirates and Kuwait as OPEC members who are balking at increasing crude oil production.

OPEC President Chakib Khelil  states that oil may reach $170 in 2008 due to a weak dollar and increasing demand.
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