Brent rises on U.S. output cuts ahead of biggest storm threat in 15 years

By Jessica Jaganathan

SINGAPORE (Reuters) – The price of Brent crude oil edged higher on Wednesday, lifted by U.S. producers shutting most of their offshore output in the Gulf of Mexico ahead of Hurricane Laura and optimism over China-U.S. trade talks.

But gains were capped amid renewed concern over the coronavirus pandemic, which has squeezed fuel demand, after reports from Europe and Asia of patients being re-infected with COVID-19, raising concerns about future immunity.

Brent crude oil futures (LCOc1) added 8 cents, or 0.2%, to $45.94 a barrel by 0134 GMT, while U.S. West Texas Intermediate crude (CLc1) was down 2 cents, or 0.1%, at $43.33 a barrel. Both benchmarks settled at a five-month high on Tuesday.

“Crude oil prices gained, dragged higher by surging gasoline futures as Hurricane Laura heads towards the U.S. Gulf Coast,” ANZ analysts said in a note on Wednesday.

The U.S. energy industry on Tuesday was preparing for a major hurricane strike. Producers evacuated 310 offshore facilities and shut 1.56 million barrels per day (bpd) of crude output, 84% of Gulf of Mexico’s offshore production – near the 90% outage that Hurricane Katrina brought 15 years ago. [nL1N2FR149]

“Markets are currently pricing in a possible near-term catastrophic gasoline shortage,” said Stephen Innes, chief global markets strategist at AxiCorp.