Crude Rises On Ike, Fannie, Freddie

Crude oil is up from Friday's close at five month lows this morning as Hurricane ike delays some production from restarting in the Gulf of Mexico.

Prices also rose after the U.S. government seized Fannie Mae and Freddie Mac, backers of almost half the nation's home loans, slowing a rally in the dollar.

Crude oil for October delivery rose as much as $2.89, or 2.7 percent, to $109.12 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $107.8 at 08:17 a.m. in London.

Hurricane Gustav shut down almost all the US oil and gas output in the Gulf of Mexico and about 80 percent of US oil output and 70 percent of the gas remained shut Sunday with producers deciding not to re-open too hastily as Ike threatens to enter the area later in the week.

The Category 3 hurricane is projected to move west across Cuba and into the Gulf during the next two days on a path that may take it toward eastern Texas.

The dollar faltered from its recent rise as investors struggled to decide whether they are worried or relieved by the U.S. rescue of Freddie Mac and Fannie Mae.

The uncertainty in the market comes at just the right time for many OPEC members meeting in Vienna this week. In the current climate just the threat of cutbacks in production may be enough to bolster the falling oil price, at least for the time being.