Oil rises; eyes hurricanes, falling inventories

SINGAPORE, Aug 2 (Reuters) Oil prices climbed half a dollar on Wednesday as a storm was forecast to head for the cluster of oil production rigs in the Gulf of Mexico this week and gasoline stocks in the United States were expected to fall.

Continued fighting between Israel and Hizbollah, a bomb blast on Iraq's oil infrastructure in Turkey and Iran's nuclear stand-off with the West added to the bullish sentiment.

U.S. light, sweet crude for September delivery rose 49 cents to .40 a barrel by 0434 GMT, rising for a third session and extending Tuesday's 51-cent gain. London ICE Brent crude rose 39 cents at .28 a barrel.

Analysts said prices would be driven more by fundamentals that could trigger supply disruptions such as the looming hurricane season and falling U.S. inventory levels than political tensions in the next one to two months.

''There are many bullish factors now. But I believe the hurricanes and U.S. stock levels will have more impact than the issues going on in the Middle East,'' said Tetsu Emori, chief commodities strategist with Mitsui Bussan Futures in Tokyo.

''The impact of the political situation is more psychological.

For example, I don't think Iran will stop exporting oil, simply because they need the money. They are not crazy, I hope.'' Tropical Storm Chris, the third named storm of the Atlantic hurricane season, swooped down on the Caribbean's northern Leeward Islands on Tuesday and could become a hurricane -- this season's first -- bound for the Gulf of Mexico later this week.

The Miami-based National Hurricane Center warned that Chris could grow into a minimum-force hurricane in 72 hours as it approached the Florida Straits on a track that could take it into the Gulf, where it could damage key U.S. oil and gas facilities.

U.S. STOCKDRAW SEEN U.S. gasoline stocks are forecast to have fallen by 1.6 million barrels to 211 million barrels for the week ended July 28, having consistently fallen over the past three weeks, a Reuters survey showed.

Crude stocks are expected have dropped by 700,000 barrels but distillates, which include heating oil and diesel, are set to show another build, by about 700,000 barrels. The U.S. oil stock data are due at 1430 GMT.

In the Middle East, Israeli commandos snatched at least three Hizbollah members deep inside Lebanon on Wednesday, in a raid Lebanese security sources said killed at least seven civilians as Israel sought to maximise the damage to Hizbollah before diplomatic efforts can bring about an end to the war.

U.S. Secretary of State Condoleezza Rice said a ceasefire could be reached within days and Israeli Prime Minister Ehud Olmert also saw movement towards a ceasefire now that Hizbollah had suffered what he said were heavy losses.

''We are at the beginning of a political process that in the end will bring a ceasefire under entirely different conditions than before,'' said Olmert, without giving any immediate time-frame.

Adding to worries over supplies, an Iraqi pipeline carrying crude from the country's northern oilfields to Turkey's Ceyhan port was bombed, pushing back the planned restart of exports along the route.

Concerns over Iran persisted as President Mahmoud Ahmadinejad insisted on the country's right to produce nuclear fuel, despite a United Nations resolution demanding that Tehran suspend its nuclear activities by Aug. 31 or face the threat of sanctions.

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