Oil traded near a four-week high as U.S. refiners returned from shut downs caused by Hurricane Harvey, boosting demand for crude.
Futures rose 0.2 percent in New York, extending the almost 4 percent increase in the previous two sessions. While Motiva Enterprises LLC works to return its Port Arthur refinery, the largest in the U.S., to 40 percent production by the end of the weekend, another Atlantic hurricane is approaching. Industry data showed crude inventories rose by 2.79 million barrels last week. If government figures Thursday also report an increase, it would be the first since the end of June.
Ports, refineries, pipelines and offshore platforms shut as Harvey intensified before making landfall on Aug. 25, leading to widespread flooding in Texas and driving up refining margins in Europe and Asia to the highest level in about two years. Many of those facilities on the U.S. Gulf coast are back in service, and Goldman Sachs Group Inc. forecast half of the refining capacity lost to the storm will be back online by Thursday and may prove positive for the oil market in a few months.
“While refineries in the U.S. Gulf are returning and creating demand, high margins are indicating to all other refineries in the world to run as much as you can, helping draw down crude inventories,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “There is potential for WTI prices to rise above $50 in the short term, but that might trigger some hedging and keep the curve flat.”
West Texas Intermediate for October delivery was at $49.25 a barrel on the New York Mercantile Exchange, up 9 cents, at 9:54 a.m. in London. Total volume traded was about 4 percent below the 100-day average. Prices gained 1 percent to close at $49.16 on Wednesday, the highest since Aug. 9.
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Brent for November settlement gained 34 cents to $54.54 a barrel on the London-based ICE Futures Europe exchange. Prices added 82 cents, or 1.5 percent, to close at $54.20 on Wednesday. The global benchmark traded at a premium of $4.85 to November WTI.
Hurricane Irma, a Category 5 that is forecast to hit Florida on Sunday, may develop into the most expensive storm in U.S. history after devastating a chain of small Caribbean islands. Miami-Dade County issued a mandatory evacuation order for some coastal areas and Barclays Plc has estimated insured losses in a worst-case scenario from the storm at $130 billion.
Oil-market news:
U.S. crude stockpiles probably expanded by 4 million barrels last week, according to a Bloomberg survey before an Energy Information Administration report on Thursday. Texas shale drillers are finding their supply chain and manpower tested as they work to get back to normal after Hurricane Harvey. A warning was issued in the Mexican state of Veracruz for Hurricane Katia, which is forecast to approach the coast late Friday or early Saturday.