Light, sweet crude for October delivery rallied US$1.88 to settle at US$118.15 a barrel on the New York Mercantile Exchange. Futures had risen to as high as US$119.63 a barrel during the trading.

The US National Hurricane Center predicted that the Tropical Storm Gustav could strengthen as it passes over Haiti, and reaches the Louisiana coast by Monday.

Royal Dutch Shell PLC and BP PLC said they have begun evacuating staff from offshore operations in the Gulf, which is home to about 25 percent of US crude production and 15 percent of its natural gas.

Crude was also supported by a government weekly inventory report showing that the US crude oil and gasoline stockpiles fell last week.

In London, Brent crude for October delivery rose US$1.59 to settle at US$116.22 a barrel on the ICE Futures Exchange.