Oil prices recovered to above $101 a barrel on Friday, as the markets kept a watchful eye on the path of Hurricane Ike that could disrupt refineries and production in the United States for weeks.

US crude for October delivery rose 45 cents to $101.37 a barrel by 0256 GMT, having settled down $1.71 a barrel on Thursday. Prices have fallen to $100.10 on Thursday, the lowest level since early April.

London Brent rose 61 cents to $98.25 a barrel, after dropping to a six-month low of $96.99 the previous day.

"This is a small price correction following heavy falls in recent days," said David Moore, a commodity strategist at Commonwealth Bank of Australia from Sydney.

Prices had fallen toward $100 on Thursday amid soft global energy demand. A report that Saudi Arabia had no plans to cut output, despite Opec's agreement this week to trim supply, also undermined prices.

But losses were reversed by Hurricane Ike, which nearly paralysed a quarter of US crude oil production and more than 16 percent of its refining capacity.

Oil markets continued to keep a careful eye on the storm, Moore said earlier in a daily note. The storm menaced Houston, the fourth-most populous US city and hub of the oil industry, sparking worries of fuel shortages and the damage could leave some coastal refineries shut for weeks.

Ike was a Category 2 storm with 100 mph (160 kph) winds and will likely come ashore late on Friday or early on Saturday, as a dangerous Category 3 storm on the five-step intensity scale with winds of more than 111 mph (178 kph), the National Hurricane Center said.

The US energy sector has already been forced to evacuate workers and batten down refineries at least four times so far this summer due to storms that have pushed into the Gulf of Mexico, starting with Hurricane Dolly in mid-July.

Storms this year have cut more than 15 million barrels of crude oil production, nearly three-quarters of what the United States consumes in a day, government data show.

Supporting prices further, the euro rebounded from one-year lows against the US dollar on Thursday due to comments from European Central Bank President Jean-Claude Trichet that inflation remained the bank's key focus.

Oil kingpin Saudi Arabia has no plans to cut oil output at present unless customer demand falls, Saudi-owned daily Al Hayat said in an unsourced report on Thursday.-Reuters