Oil rises on US stock draw and hurricane jitters

A pump jack is seen at sunrise on October 14, 2014 near Bakersfield, California. REUTERS/Lucy Nicholson/File Photo Get license rights

  • Crude inventories fell by 11.5 million barrels -API
  • Saudi official selling prices for October may rise

London, Aug. 30 (Reuters) – Hurricanes in the Gulf of Mexico put investors on edge after crude inventories in the world’s biggest fuel consumer, the United States, fell sharply.

Brent crude for October delivery was up 42 cents, or 0.49%, at $85.91 a barrel by 0748 GMT. The October contract expires on Thursday and the most active November contract rose 41 cents to $85.32.

US West Texas Intermediate crude futures were up 50 cents, or 0.62%, at $81.66.

Both benchmarks rallied over a dollar on Tuesday as the greenback slipped after soft US jobs data dampened prospects for further hikes in interest rates.

U.S. crude stocks fell by a better-than-expected 11.5 million barrels in the week ended Aug. 25, market sources said, citing data from the American Petroleum Institute.

Fujitomi Securities analyst Toshitaka Tazawa said the drop indicates firm demand.

Investors kept an eye on Hurricane Italia moving into the Gulf of Mexico, east of major U.S. oil and natural gas production sites. According to the Energy Information Administration, the region accounts for 15% of US oil production and 5% of natural gas production.

Oil major Chevron Corp ( CVX.N ) pulled some workers out of the region, but production continued.

Elsewhere, analysts expect Saudi Arabia, the world’s biggest oil exporter, to extend its voluntary output cuts until October to keep oil supplies tight.

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Based on that expectation, refining sources polled by Reuters predicted Saudi Arabia’s official selling prices for all crude grades sold to Asia in October would be the highest this year.

Meanwhile, the military seized power in Gabon on Wednesday, which will hit the country’s crude supply and further tighten the market. Gabon exported an average of 160,000 barrels a day to Asia from May to July, Kpler ship tracking data showed.

However, oil gains were capped by worries about fuel demand and a mixed economic situation in China, the world’s largest oil importer.

Reporting by Paul Karsten in London, Yuka Obayashi in Tokyo and Trixie Yap in Singapore Editing by David Goodman

Our Standards: Thomson Reuters Trust Principles.

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Paul is a Pulitzer Prize finalist, Selden Ring Award winner and Foreign Press Club runner-up for investigations into abuses by the Nigerian military. Currently based in London, he has also been to Nigeria, China and Thailand. Contact: +447737338528

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