Oil prices rise as hurricane fears remain

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World oil prices have climbed after weather forecasters warned that Hurricane Emily could strenthen again and as traders expected stormy Gulf of Mexico weather to impact on US stocks data.

Fears over US Gulf oil rigs subsided on Tuesday as Hurricane Emily weakened, but the Miami Hurricane Centre (MHC) cautioned that "strengthening (is) expected during the next 24 hours... and Emily could become a major category three hurricane before landfall".

New York's main contract, light sweet crude for delivery in August, gained 41 cents to 57.73 dollars per barrel in electronic dealing.

In London, the price of Brent North Sea crude oil for delivery in September added 27 cents to 57.26 dollars per barrel.

The MHC also downgraded Emily to a category one hurricane from a previous category four.

Emily could gain strength as she "heads back over warm waters in the southern Gulf of Mexico, where most of Mexico's oilfields are located", Sucden analysts noted.

The Miami weather forecasters have not ruled out the possibility of the hurricane hitting Texas, a key US oil refinery region, and a hurricane warning remains in the area for the next 36 hours.

Analysts expected Wednesday's weekly US government snapshot of crude inventories data to reflect production shutdowns in the Gulf of Mexico.

Stock levels are expected to fall again owing to Hurricane Dennis which caused disruption at US oil platforms and refineries at the start of the month.

Hurricane Emily is the second major storm to hit the region in two weeks following Dennis, which left at least 62 dead, mostly in Haiti. Emily has claimed 10 lives across the Caribbean so far.

State owned Mexican oil monopoly Pemex hoped to restart Gulf operations on Wednesday after three days of interruption caused by Emily.

Pemex had evacuated most of its staff from the area and shut down the majority of production from Campeche Sound -- which provides around 2.95 million barrels per day, or 80 percent of Mexico's total crude output.

Mexico, the world's fifth biggest oil producer and the ninth largest crude exporter, exports over 1.8 million bpd, virtually all of which heads north to the US.

Meanwhile, the Organisation of Petroleum Exporting Countries (OPEC) cut its estimate for oil demand this year by 150,000 barrels a day on Monday.

OPEC's cut put total annual growth for the year at 2.0 percent or an extra 1.62 million barrels per day compared with 2004.