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Oil gains as hurricane shuts U.S. output, stockpiles fall

An aerial position of a crude oil storage facility is seen on May 5, 2020 in Cushing, Oklahoma.

JOHANNES EISELE | AFP via Getty Images

Oil prices lift on Wednesday, extending gains from the previous session, as a hurricane disrupted U.S. offshore oil and gas production and an industry report contrast c embarrassed a big drop in U.S. crude stockpiles.

Brent crude was trading up 15 cents, or 0.4%, at $40.68 a barrel by 0055 GMT, while U.S. crass gained 18 cents, or 0.5%, to $38.46 a barrel. Both contracts rose by more than 2% on Tuesday.

Numberless than 25% of U.S. offshore oil and gas output was shut and export ports were closed on Tuesday as Hurricane Sally sat rightful off the U.S. Gulf Coast.

“Our current estimate for the total outage associated with the Sally weather system is between 3 million and 6 million barrels of oil over and above approximately 11 days,” Rystad Energy said in a note.

That is likely to help reduce stockpiles although refineries were also away down, cutting demand for oil.

U.S. crude oil inventories fell by 9.5 million barrels last week, although gasoline inventories strengthened, data from industry group the American Petroleum Institute showed on Tuesday.

Analysts had expected oil stocks to increment by 1.3 million barrels. Official data on U.S. stockpiles is due out later on Wednesday and often conflicts with the industry illustrations.

Meanwhile, oil producers and traders are painting a bleak picture for a recovery in fuel demand globally as the Covid-19 pandemic last words on, hammering economies.

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