Oil Holds Near 5-Month High on US Output Cuts

Oil Holds Near 5-Month High on US Output CutsOil Holds Near 5-Month High on US Output Cuts

Oil rose towards $46 a barrel on Wednesday, near the highest since March, lifted by US producers shutting most of their offshore Gulf of Mexico output ahead of Hurricane Laura and a report showing a drop in US crude inventories.
Renewed worries over the Covid-19 pandemic, which has squeezed demand and sent prices to record lows in April, capped gains after reports this week of patients being re-infected, raising concerns about future immunity, Reuters reported.
Brent crude rose 2 cents to $45.88 a barrel, while US West Texas Intermediate crude fell 3 cents to $43.32. Both benchmarks settled at a five-month high on Tuesday.
“Oil traders will be preoccupied with the hurricane today,” said Tamas Varga of broker PVM. “Once the danger passes, demand considerations will come into focus again.”
The US energy industry was preparing on Tuesday for a major hurricane strike. Producers shut 1.56 million barrels per day of crude output, representing 84% of the Gulf of Mexico’s offshore production and close to the 90% outage that Hurricane Katrina brought 15 years ago.
 “We do see some support on the back of hurricane activity,” Dutch bank ABN AMRO said in a report. “The threat of being infected by the COVID-19 virus threatens a further recovery in oil demand.”

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