September 28, 2020

Oil holds close to five-month excessive on U.S. output cuts, virus concern weighs

By Alex Lawler

LONDON: Oil edged up in direction of $46 a barrel on Wednesday, near its highest since March, lifted by U.S. producers shutting most of their offshore Gulf of Mexico output forward of Hurricane Laura and a report displaying a drop in U.S. crude inventories.

Renewed worries over the Covid-19 pandemic, which has squeezed demand and despatched costs to report lows in April, restricted features after reviews this week of sufferers being re-infected, elevating issues about future immunity.

Brent crude rose eight cents, or 0.2 per cent, to $45.94 a barrel by 1331 GMT, whereas U.S. West Texas Intermediate crude added 26 cents, or 0.6 per cent, to $43.61. Each benchmarks settled at a five-month excessive on Tuesday.

“Oil merchants might be preoccupied with the hurricane at this time,” mentioned Tamas Varga of dealer PVM. “As soon as the hazard passes, demand concerns will come into focus once more.”

The U.S. power business was getting ready on Tuesday for a serious hurricane strike. Producers shut 1.56 million barrels per day (bpd) of crude output, representing 84 per cent of the Gulf of Mexico’s offshore manufacturing and near the 90 per cent outage that Hurricane Katrina introduced 15 years in the past.

“We do see some help on the again of hurricane exercise,” Dutch financial institution ABN AMRO mentioned in a report. “The specter of being contaminated by the Covid-19 virus threatens an additional restoration in oil demand.”

Oil was additionally boosted on Tuesday by U.S. and Chinese language officers reaffirming their dedication to a Section 1 commerce deal. Additional help got here from American Petroleum Institute figures displaying U.S. crude stocks fell greater than anticipated.

A report oil output lower by the Group of the Petroleum Exporting Nations (OPEC) and allies together with Russia has helped to elevate Brent from April’s 21-year low beneath $16.

The U.S. authorities’s Vitality Info Administration report at 1430 GMT might be in focus to see if it confirms the API figures.