Hurricane in Gulf of Mexico blows oil prices higher

London — Oil prices extended gains on Wednesday after industry data showed a large draw in crude inventories in the US, the world’s biggest fuel consumer, and as a hurricane in the Gulf of Mexico kept investors on edge.

Brent crude futures for October rose by 42c, or 0.49%, to $85.91 a barrel by 7.48am GMT. The October contract expires on Thursday and the more active November contract was at $85.32, up 41c.

US West Texas Intermediate crude futures rose 50c, or 0.62%, to $81.66.

Both benchmarks rallied more than a dollar on Tuesday as the  dollar slid after prospects of further increases to interest rates eased after softer US job data.

US crude stocks fell by a bigger than expected 11.5-million barrels in the week ended August 25, market sources said, citing American Petroleum Institute figures on Tuesday.

The drop suggests firm demand, said Fujitomi Securities analyst Toshitaka Tazawa.

Investors also had an eye on Hurricane Idalia as it moves over the Gulf of Mexico to the east of major US oil and natural gas production sites. The region accounts for about 15% of US oil output and about 5% of natural gas production, according to the Energy Information Administration.

Oil major Chevron evacuated some staff from the region but production was continuing.

Elsewhere, analysts expect Saudi Arabia, the world’s biggest oil exporter, to extend its voluntary output cut into October, keeping oil supply tight.

Based on that expectation, refining sources surveyed by Reuters forecast that Saudi Arabia’s official selling prices for all crude grades sold to Asia in October will be raised to their highest this year.

Meanwhile, the military in Gabon seized power on Wednesday, which could hit the country’s crude supplies and tighten the market further. Gabon exported a monthly average of 160,000 barrels per day to Asia from May to July, Kpler ship-tracking data showed.

Oil’s gains were capped, however, by concerns over fuel demand and the mixed economic situation in China, the world’s biggest oil importer.

Reuters