Aug. 31 (Bloomberg) -- Crude oil rose to its highest close since Aug. 3 on concern a storm in the Atlantic Ocean may intensify and threaten rigs and pipelines in the Gulf of Mexico.

A weather system east of the Windward Islands may become a tropical depression later today, the Miami-based National Hurricane Center said on its Web site. Oil prices surged after hurricanes Katrina and Rita devastated Gulf of Mexico oil platforms and pipelines in 2005. About 27 percent of U.S. oil production comes from the Gulf, Energy Department data show.

The weather disturbance ``has the potential of turning into a hurricane in a few more days,'' said Paul Tossetti, director of oil market analysis at PFC Energy in Washington. ``Memories of Rita and Katrina are still pretty fresh in peoples' minds.''

Crude oil for October delivery rose 68 cents, or 0.9 percent, to settle at $74.04 a barrel at 2:57 p.m. on the New York Mercantile Exchange. Oil is up 4.2 percent for the week and 21 percent for the year.

Hurricane Dean, which made landfall in Mexico earlier this month, caused the evacuation of offshore platforms operated by Mexico's state-owned oil company Pemex, cutting almost 2.7 million barrels a day of production. More than 80 percent of crude production was restored by Aug. 25.

Signs that rising credit costs in the U.S. may curb economic growth and energy use contributed to a 5.3 percent decline in oil prices this month.

``People are waiting for signals of real change in the world economy and that could happen, not just with the subprime market, but with lower demand in other places like Asia,'' said Kenichiro Yamaguchi, chief operating officer for Petro-Diamond Risk Management Ltd. in London, a unit of Mitsubishi Corp., Japan's largest trading company.

Limiting Damage

The Federal Reserve will ``act as needed'' to limit damage to consumer spending and economic growth that may arise from a deepening housing recession, U.S. Federal Reserve Chairman Ben S. Bernanke said in Jackson Hole, Wyoming, today.

Signals of a cut in interest rates ``would reinforce the idea that the economy is going to move along,'' said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. ``That, by definition, is good for oil.''

Brent crude oil for October settlement rose 79 cents, or 1.1 percent, to $72.69 a barrel on the ICE Futures Exchange in London.

Trading on ICE in London will close early on Monday, Sept. 3, because of the Labor Day holiday in the U.S. Trading in New York will be closed for the holiday, Nymex said.

Crude oil prices may fall next week on concern that U.S. economic growth will slow, reducing fuel demand. Twelve of 31 analysts surveyed by Bloomberg News, or 39 percent, said prices would decline. Eleven, or 35 percent, said oil would be little changed and eight predicted a rise.

To contact the reporter on this story: Robert Tuttle in New York at rtuttle@bloomberg.net

Last Updated: August 31, 2007 15:40 EDT