Aug. 29 (Bloomberg) -- Crude oil headed for its biggest weekly gain in almost two months and natural gas rose as producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina.

Royal Dutch Shell Plc and ConocoPhillips started pulling workers from Gulf of Mexico platforms and cutting production in a region that pumps 26 percent of U.S. oil and 14 percent of gas output. Louisiana officials said they will start evacuating residents today in two counties around New Orleans that house refineries owned by Exxon Mobil Corp. and Valero Energy Corp.

Crude oil for October delivery rose as much as $1.80, or 1.6 percent, to $117.39 a barrel on the New York Mercantile Exchange. It was at $117.34 a barrel at 1:31 p.m. London time. Prices are up 2 percent this week, the biggest gain since the week of July 4.

``If we see some major disruptions from the hurricane upstream or downstream, we could break through and see prices of $130 next week,'' said Andy Sommer, an HSH Nordbank analyst in Hamburg. ``If there is no disruption, we could come back down to $110 again.''

Natural gas for October delivery rose as much as 20 cents, or 2.5 percent, to $8.250 per million British thermal units on Nymex. It was at $8.232 per million Btus at 1:32 p.m. London time.

Shell Evacuations

Royal Dutch Shell Plc is evacuating workers from its Gulf of Mexico operations. The company pulled out 350 offshore workers yesterday and 400 the previous day, Shell said in a statement. The remaining workers will be withdrawn today and tomorrow.

Gulf of Mexico platforms produced 1.3 million barrels of oil and 7 billion cubic feet of gas a day in June, according to the Minerals Management Service. U.S. states on the Gulf, including Louisiana and Texas, contain 56 operable refineries that account for about 47 percent of U.S. refining capacity, according to information on the Web site of the Energy Information Administration.

The U.S. will be celebrating the Labor Day holiday on Sept. 1 and floor trading on the Nymex will be closed. Traders will still be able to carry out electronic deals.

Gustav is at near-hurricane strength, packing sustained winds of 65 miles (105 kilometers) an hour. The storm is about 85 miles west of Kingston, Jamaica, and heading west-northwest at 8 mph, the U.S. National Hurricane Center said on its Web site at 5 a.m. Miami time. Tropical Storm Hanna formed northeast of the Bahamas yesterday.

``Gustav is back in investor focus, despite reassurances from the IEA and the Department of Energy that they are ready to tap into emergency oil reserves,'' said Andrey Kryuchenkov, an analyst at London-based Sucden (U.K.) Ltd. ``Gustav could develop into a major hurricane.''

2005 Damage

Katrina, which reached Category 5, the strongest grade of hurricane, closed 95 percent of offshore output in the Gulf of Mexico. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by hurricanes Katrina and Rita in 2005.

Brent crude oil for October settlement rose as much as $1.73, or 1.5 percent, to $115.90 a barrel on London's ICE Futures Europe exchange. It was at $115.75 at 1:32 p.m. local time. The contract fell yesterday $2.05, or 1.8 percent, to settle at $114.17 a barrel.

Russian Tensions

Prices were backed by concerns over increasing tensions between Russia and the West.

Russia may curb oil shipments to Western Europe in retaliation for the threat of European Union sanctions and NATO's naval actions in the Black Sea, the Daily Telegraph reported, without citing anyone.

Russian oil companies were ordered by the government to cut supplies to Germany and Poland through the Druzhba pipeline, and executives from OAO Lukoil have been put on alert for the weekend, the London-based newspaper reported.

Supplies may be cut as early as Sept. 1, the newspaper said, citing an unidentified business person. The cut would come at the same time as an emergency EU summit in Brussels to discuss sanctions against Russia, the newspaper said.

``A prolonged cut would be a major concern for the market,'' said Sommer of HSH Nordbank.

Oil price are expected to climb next week as Gustav impacts the Gulf's production facilities.

Eleven of 29 analysts surveyed by Bloomberg News, or 38 percent, said prices will increase through Sept. 5. Nine of the respondents, or 31 percent, said oil will decline and nine said prices will be little changed. Last week 55 percent expected futures to increase.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

Last Updated: August 29, 2008 09:01 EDT