Oil prices rose on Wednesday, boosting gains from the previous session, disrupting US offshore oil and gas production in the form of a storm and an industry report showed a large drop in US raw material reserves. Brent crude was up 15 cents or 0.4 percent at $ 40.68 a barrel at 0055 GMT (6:25 am in India), while US crude rose 18 cents, or 0.5 percent, to $ 38.46 a barrel. Both contracts rose more than 2 percent on Tuesday.
More than 25 percent of US offshore oil and gas production was closed, and the export port was closed on Tuesday as Hurricane Sally sat a few blocks away from the US Gulf Coast.
“The total outage associated with the Sally Weather system is estimated at between 3 million and 6 million barrels of oil in 11 days,” Ristad Energy said in a note.
This is likely to help reduce reserves, although refineries were also closed, cutting oil demand.
US crude oil inventories fell by 9.5 million barrels last week, although gasoline inventories have increased, data from industry group American Petroleum Institute showed on Tuesday.
Analysts had expected oil reserves to rise by 1.3 million barrels. Official data on US stockpiles are due later on Wednesday and often conflict with industry data.
Meanwhile, oil producers and traders are painting a blurry picture for the reduction in fuel demand globally, as the COVID-19 pandemic strikes the economies.