NEW YORK: Crude oil prices rose on Tuesday, headed toward a five-month high as U.S. producers shut most output in the Gulf of Mexico ahead of Hurricane Laura even as rising coronavirus cases in Asia and Europe capped gains.
Brent futures rose 83 cents, or 1.8%, to $45.96 a barrel by 1:22 p.m. EDT (1722 GMT), while U.S. West Texas Intermediate crude rose 83 cents, or 2.0%, to $43.45.
That puts both benchmarks on track to settle at their highest since March 5.
U.S. producers cut crude output ahead of Hurricane Laura at a rate approaching the level of 2005’s Hurricane Katrina and halted most oil refining along the Texas/Louisiana coast.
Laura is expected to strengthen into a major hurricane with 115 mile per hour (185 kph) winds when it strikes the coast near the Texas-Louisiana border early Thursday, according to the U.S. National Hurricane Center.
On Monday, energy firms shut 1.5 million barrels per day of crude output, 82% of Gulf of Mexico’s offshore production, near the 90% outage that Katrina brought 15 years ago.
“The storm factor will remain a primary focus in the energy complex through the rest of this week, likely overshadowing tomorrow’s (Energy Information Administration) report as a significant price driver,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.
Analysts forecast U.S. crude stockpiles fell for a fifth week in a row last week, according to a Reuters poll conducted ahead of reports from the American Petroleum Institute (API) on Tuesday and the U.S. Energy Information Administration on Wednesday.
“Overall, hurricanes may be limiting supply this week … but the market will soon again focus on the biggest hurricane of them all, COVID-19,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.
Europe is seeing a rise in coronavirus cases, including re-infection. Two re-infections were reported in Europe and one in Hong Kong.
Elsewhere, U.S. and Chinese trade officials reaffirmed their commitment to a Phase 1 trade deal.
(Additional reporting by Julia Payne in London and Jessica Jaganathan in Singapore; Editing by Barbara Lewis, Kirsten Donovan, David Gregorio and Richard Chang)
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