Aug 28. In global petroleum market headlines, oil prices spiked to near USD 119 a barrel Thursday in Asia on fears that Tropical Storm Gustav could strengthen on its way toward crude and natural gas rigs and refineries in the Gulf of Mexico. Light, sweet crude for October delivery was up 80 cents at USD 118.95 a barrel in electronic trading on MICEX by midday in Singapore. The contract jumped USD 1.88 overnight to settle at USD 118.15 a barrel. In London, October Brent crude rose 70 cents to USD 116.92 a barrel. Royal Dutch Shell PLC said it is evacuating some 300 workers from offshore Gulf rigs, while BP PLC is also removing staff from the region that is home to about a quarter of U.S. crude production and much of its natural gas. Though it is still too soon to know exactly where the storm will hit, some models showed Gustav taking a path toward Louisiana and other Gulf states devastated by Hurricanes Katrina and Rita three years ago. New Orleans is said to be at risk again. One weather research firm predicted as much as 80% of the Gulf's oil and gas production could be shut down as a precaution if Gustav enters the region as a major storm. Louisiana Gov. Bobby Jindal declared a state of emergency and activated the National Guard in advance of storm Gustav. Jindal said Wednesday 3,000 National Guard troops will be activated and deployed a day in advance of the storm's expected landfall. An additional 2,000 troops could be called up to duty. Gustav formed Monday and roared ashore Haiti Tuesday as a Category 1 hurricane. The storm triggered flooding and landslides that killed 23 people in the Caribbean. It weakened into a tropical storm and appeared headed for Cuba, though it is likely to grow stronger in the coming days by drawing energy from warm open water. In 2005, Katrina and Rita destroyed 109 oil platforms and five drilling rigs. Gustav is the first storm of the 2008 Atlantic hurricane season to pose a serious threat to the more than 4,000 oil and gas installations in the Gulf. Oil prices were also supported by a weaker dollar, which boosted the demand for oil among investors who buy commodities as a hedge against inflation. The euro gained to USD 1.4776 while the dollar was steady against the yen. Moving forward, prices can be expected to stay high until Gustav reaches the GoM. Right now things could go two ways: the storm could veer off towards southern Cuba and lose some of its strength by making landfall there, or strike a direct hit in the Gulf perhaps even with the same intensity as Hurricane Katrina 3 years ago, as some forecasters are now predicting. The chances of a cat 5 hurricane could push oil up several dollars before the storm makes landfall, and prices could soar back to record highs if serious damage is done to Gulf installations. The weather will remain the key driver heading into the weekend and also early next week. Traders will almost certainly stay long heading into the long Labor Day weekend in the US. The petroleum market is visibly spooked by the prediction that Gustav could be the most damaging hurricane since Katrina.