Oil prices rise as Texas braces for tropical storm

By Claire Milhench

LONDON (Reuters) - U.S. crude oil prices edged up on Tuesday, supported by warnings that a tropical storm was about to hit the coast of the oil-producing state of Texas, while oversupply kept Brent steady.

U.S. crude, also known as West Texas Intermediate (WTI), was up 51 cents at $60.03 a barrel at 0803 GMT, staying within a range of $57-$62 per barrel that has been in place since the beginning of May.

Brent was up 13 cents at $64.08 per barrel.

The U.S. National Hurricane Center (NHC) issued a tropical storm warning on Tuesday for the Texas coast from Baffin Bay to High Island.

Chevron Corp and Royal Dutch Shell have evacuated non-essential workers from oil platforms but have not yet shut production in a basin responsible for nearly a fifth of U.S. crude oil output.

"The storm explains WTI's outperformance over Brent, and maybe there is some expectation in the market that U.S. inventory data will show another draw, which could explain the small rebound in prices," said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

U.S. crude stocks are forecast to have fallen 1.8 million barrels week-on-week, according to a Reuters poll of analysts, the seventh weekly draw in a row. The data from the Energy Information Administration is due on Wednesday. [EIA/S]

"That has been the main source of support, because OPEC is still over-supplying," said Ole Hansen, senior commodity strategist at Saxo Bank.

Unsold North Sea and West African crude barrels are building up in tankers offshore in the Atlantic Basin, weighing on physical crude prices. This is despite the fact that European refiners are running hard to take advantage of strong margins.

Iran is also thought to be storing as much as 40 million barrels of oil on supertankers at sea, ready for a sales drive if a deal over its nuclear programme can be agreed. This is all capping Brent's upside potential.

"My longer-term perspective is that around $65 is a sweet spot (for Brent) and that we will range-trade round here for the foreseeable future," said Christopher Bellew, senior broker at Jefferies Bache in London.

(Additional reporting by Henning Gloystein in Singapore and Osamu Tsukimori in Tokyo; Editing by Dale Hudson)