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Oil gains as hurricane shuts US output, stockpiles fall

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

FILE PHOTO: Dust blows around a crude oil pump jack and flare burning excess gas at a drill pad in the Permian Basin in Loving County, Texas, U.S. November 25, 2019.REUTERS/Angus Mordant

16 Sep 2020 09:25AM

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TOKYO: Oil prices rose on Wednesday, extending gains from the previous session, as a hurricane disrupted U.S. offshore oil and gas production and an industry report showed a big drop in U.S. crude stockpiles.

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

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More than 25per cent of U.S. offshore oil and gas output was shut and export ports were closed on Tuesday as Hurricane Sally sat just 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 approximately 11 days," Rystad Energy said in a note.

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

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