* Gustav shuts U.S. Gulf of Mexico oilfields, refineries
* Gustav expected to hit Gulf coast as Category 3
* Iran says $100 a barrel lowest acceptable price
(Recasts, updates quotes, forecast for Gustav)
By Matthew Robinson
LONDON, Sept 1 (Reuters) - Oil fell on Monday as concerns
that Hurricane Gustav would cause severe damage to the U.S. oil
sector eased as the storm failed to pick up strength as it
barrelled toward the Louisiana coast.
Gustav -- which forced the shutdown of nine refineries and
most U.S. offshore Gulf of Mexico oil production -- was expected
to make landfall before midday local time as a Category 3
hurricane and its outer bands were already hitting the
coast early Monday. []
The storm failed to draw as much power as once feared,
however, and forecasters said it was unlikely to grow stronger
now and should weaken as it moves ashore.
For a graph on the projected path of Gustav, please click
on: https://customers.reuters.com/d/graphics/STRM_GUSTAVU2.gif
U.S. crude <CLc1> fell $1.16 to $114.30 a barrel by 1436 GMT
after opening for electronic trading several hours earlier than
usual. Trade in the United States will be shut due to the U.S.
Labor Day holiday.
London Brent crude fell $1.27 to $112.78 a barrel.
"It looks like Gustav is not going to be a Category 4, it's
going to hit as a Category 3, and that's taking away some of the
risk premium," said Thomas Stenvoll, UBS oil strategist, adding
the market was waiting to see if Gustav severely damages oil
infrastructure as it passes onshore.
At least 12.5 percent of total U.S. refining capacity was
shut down ahead of the storm and other plants cut rates. The
Louisiana Offshore Oil Port, the only U.S. port capable of
offloading the biggest oil tankers, halted all operations.
Gustav is the biggest threat to the region -- home to a
quarter of U.S. oil output and 15 percent of natural gas output
-- since Hurricanes Katrina and Rita wrecked more than 100
offshore oil platforms in 2005 and closed several large
refineries for months.
Nearly 2 million people fled the Louisiana coast and more
than 11 million residents in five U.S. states were threatened by
the storm. []
The NYMEX declared force majeure on all delivery obligations
under its August and September natural gas futures after ports
and the Henry Hub delivery point were shuttered.
OPEC, RUSSIA
Iran's oil minister said on Sunday $100 a barrel was the
lowest acceptable price for crude. Iran, OPEC's second-largest
producer, has said the oil market is oversupplied as prices have
dropped from the record high over $147 a barrel struck in July.
OPEC meets in Vienna on Sept. 9 to discuss output policy but
other member nations have not come out and publicly backed Iran.
Venezuela and Ecuador said on Friday that they expect the oil
exporters group to maintain current output levels.
Traders are also eyeing ongoing tensions between Russia and
the West, after Kremlin leader Dmitry Medvedev said on Sunday
that Russia does not want a confrontation with the West but will
hit back if attacked. Britain on Monday called for the European
Union to suspend talks on a new partnership agreement with
Russia to protest Moscow's military intervention in Georgia.
Russia, the top natural gas exporter and the No. 2 oil
exporter, supplies more than a quarter of Europe's gas needs.
(Additional reporting by Fayen Wong in Perth; editing by James
Jukwey)
