Oil prices gained Wednesday on fears of potential damage to U.S. oil production from Hurricane Irma, as well as renewed demand for crude from restarted refineries in the Gulf Coast.
Light, sweet crude for October delivery rose 44 cents, or 0.9%, to $49.10 a barrel on the New York Mercantile Exchange, trading near a one-month high. Brent, the global benchmark, rose 57 cents, or 1.1%, to $53.95 a barrel.
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The upswing in crude prices marked a swift reversal from last week, when prices had languished in the wake of Hurricane Harvey. The storm knocked out more than 20% of U.S. refining capacity, cutting demand for crude and weighing on prices.
Refining capacity has since started to come back online, providing support for crude.
"The price decreases before were probably considered overdone by market participants," Eugen Weinberg, head of commodities research at Commerzbank, said of the quicker-than-expected recovery at refineries and other oil infrastructure damaged by Harvey.
At the same time, the market is preparing for potential disruptions to oil production in the Gulf of Mexico as the result of Hurricane Irma, which made landfall in the Caribbean earlier today, and other brewing storms. If crude output is hindered by the new storms it would boost prices, Mr. Weinberg said.
Brent also responded positively Tuesday to suggestions by the Russian energy minister, Alexander Novak, that Russia and Saudi Arabia would be open to extending their output cut agreement, according to Michael Hewson, chief market analyst at brokerage CMC Markets PLC.
The Organization of the Petroleum Exporting Countries -- of which Saudi Arabia is the largest member -- and 10 producers outside the cartel, including Russia, first agreed late last year to cap production at around 1.8 million barrels a day lower than peak Oct. 16 levels, with the aim of reining in the global oil glut and sending prices higher.
The deal, which was extended in May until March 2018, has been undermined by falling compliance, growing U.S. output and an unexpected surge in production from Libya and Nigeria -- two member states exempted from the agreement because their oil industries had been damaged by civil unrest.
Analysts said they were looking ahead to official U.S. data this week on crude inventory levels, which have fallen consistently in recent months, while cautioning that the information was likely to be less reliable than usual as a result of Harvey.
Gasoline futures fell 2.1% to $1.6635 a gallon and diesel futures rose 0.5% to $1.7574 a gallon.
--Stephanie Yang contributed to this article.
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(END) Dow Jones Newswires
September 06, 2017 10:10 ET (14:10 GMT)