Oil prices rose on Tuesday as concerns about a newly formed tropical storm in the Atlantic countered fresh troubles in credit markets.
U.S. light, sweet crude gained as much as 70 cents at $72.32 per barrel by mid-afternoon Tuesday.
London Brentcrude rose 25 cents to $70.48 per barrel.
Tropical Storm Dean formed in the Atlantic Ocean midway between Africa and the Caribbean on Tuesday, and forecasters said it could become the first Atlantic hurricane of 2007 later in the week.
While forecasters said the storm was days away from possible contact with land, energy markets were also eyeing a weather system in the south-central Gulf of Mexico that could become a tropical depression in the near future.
Roughly a third of U.S. domestic oil and gas production comes from the Gulf of Mexico, but output had yet to be affected by either storm.
Oil prices fell earlier in the day after Sentinel Management Group, which oversees about $1.6 billion in assets, told clients it wanted to block redemptions to avoid a forced liquidation.
Sentinel, a money market mutual fund firm for commodities, has asked the U.S. Commodities Futures Trading Commission to allow it to halt client redemptions until it can conduct them in an orderly fashion, CNBC television reported.
"This is obviously a concern," said Phil Flynn, analyst at Alaron Trading in Chicago. "With these commodity redemptions, we don't know if it's a larger problem or just a symptom of the ongoing problem."
"We'd obviously be higher if it were only about the storm," he said.
OPEC warned on Tuesday that a slowing U.S. economy and the subprime mortgage crisis could cut oil consumption this year.
"The more bearish economic trend which has materialized in recent weeks could negatively impact demand growth in the second half of the year," OPEC said in its monthly report.
But some analysts contend oil supplies will have trouble keeping up with demand growth later this year unless OPEC increases production when it meets next month.
Lehman Brothers said last week it expected oil prices to remain above $60 this year, while Goldman Sachs said the nine percent fall from a record high of $78.77 on Aug. 1 represented a chance to buy.
Analysts are also waiting to see if hedge fund investors take their money back this week. Investors have to notify their managers by Aug. 15 to pull money out at the end of the third quarter.
A Reuters poll of analysts ahead of weekly U.S. government inventory data on Wednesday forecast it would show a decline of 2.2 million barrels for crude for the week through Aug. 10, an increase of 1.1 million barrels in distillates and a decline of 1 million barrels in gasoline stockpiles.