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UPDATE 6-Oil holds near five-month high on U.S. output cuts, virus concern weighs

Wed, 26th Aug 2020 04:47

* Hurricane Laura seen as biggest storm threat since Katrina

* U.S. crude and gasoline stocks fall -API

* Coming up: EIA inventory data at 1430 GMT
(Updates prices)

By Alex Lawler

LONDON, Aug 26 (Reuters) - Oil edged up towards $46 a barrel
on Wednesday, close to its highest since March, lifted by U.S.
producers shutting most of their offshore Gulf of Mexico output
ahead of Hurricane Laura and a report showing a drop in U.S.
crude inventories.

Renewed worries over the COVID-19 pandemic, which has
squeezed demand and sent prices to record lows in April, limited
gains after reports this week of patients being re-infected,
raising concerns about future immunity.

Brent crude rose 8 cents, or 0.2%, to $45.94 a
barrel by 1331 GMT, while U.S. West Texas Intermediate crude
added 26 cents, or 0.6%, to $43.61. Both benchmarks
settled at a five-month high on Tuesday.

"Oil traders will be preoccupied with the hurricane today,"
said Tamas Varga of broker PVM. "Once the danger passes, demand
considerations will come into focus again."

The U.S. energy industry was preparing on Tuesday for a
major hurricane strike. Producers shut 1.56 million barrels per
day (bpd) of crude output, representing 84% of the Gulf of
Mexico's offshore production and close to the 90% outage that
Hurricane Katrina brought 15 years ago.

"We do see some support on the back of hurricane activity,"
Dutch bank ABN AMRO said in a report. "The threat of being
infected by the COVID-19 virus threatens a further recovery in
oil demand."

Oil was also boosted on Tuesday by U.S. and Chinese
officials reaffirming their commitment to a Phase 1 trade deal.
Further support came from American Petroleum
Institute figures showing U.S. crude stocks fell more
than expected.

A record oil output cut by the Organization of the Petroleum
Exporting Countries (OPEC) and allies including Russia has
helped to lift Brent from April's 21-year low below $16.

The U.S. government's Energy Information Administration
report at 1430 GMT will be in focus to see if it confirms the
API figures.
(Additional reporting by Jessica Jaganathan; editing by Jason
Neely and David Evans)

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