Oil Prices Up Ahead of Hurricane Season

U.S. crude prices extended gains and Brent briefly turned higher on Thursday as the first hurricane of the 2015 Atlantic season sparked concern as the front-month September contract approached expiration.

Danny reached hurricane strength on Thursday, though it was relatively small and projected to weaken back into a tropical storm before reaching Puerto Rico on Tuesday, according to the U.S. National Hurricane Center.

"Even though it may not threaten any oil infrastructure, it is the first hurricane of the season," said Phil Flynn, analyst at Price Futures Group.

U.S. futures earlier retested support near $40 a barrel, falling to their lowest since the global financial crisis in 2009, and Brent fell to a fresh October contract low above $46 as a global supply glut and concerns about sputtering growth in China continue to weigh on oil prices.

Anxiety about global economic growth sent shares in Asia to a two-year low, German stocks extended losses and face their worst month since 2012 and British stocks hit their lowest since January.

"Global equities are a negative price driver for the oil and broader commodity complex," Dominick Chirichella, senior partner at Energy Management in New York said in a note.

U.S. crude oil <CLU5> was up 30 cents at $41.10 a barrel at 12:03 p.m. EDT (1603 GMT), after falling to a 6-1/2-year low of$40.21.

U.S. October <CLV5> was up 20 cents at $41.47, after dropping intraday to $40.50, a contract low.

Brent October crude <LCOc1> was down 7 cents at $47.09, having fallen to a fresh contract low of $46.31, still well above Brent's 2015 low of $45.19 struck in January.

U.S. crude inventories rose 2.6 million barrels last week to 456.21 million barrels, the Energy Information Administration said in a report on Wednesday, as imports rose and refinery utilization dropped.

Analysts had been expecting a stock draw and the news pushed U.S. crude down more than 4 percent on Wednesday.

Earlier on Thursday, U.S. RBOB gasoline <RBc1> was registering the biggest percentage loss in the oil futures complex.

"The rotation in downside selling leadership to the gasoline market during the past week appears to reflect heavy speculative liquidation," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a research note.

The front-month September contract's premium to October <RBc1-RBc2> has been reduced to less 14 cents a gallon this week after it was above 21 cents on Aug. 12.