Oil held gains near the highest in more than three weeks as key refineries and pipelines restarted operations following shutdowns forced by Hurricane Harvey, reviving crude demand in the heart of the U.S. energy sector.
Jose, heading for the Caribbean, strengthened to a hurricane on Wednesday and could become a major Category 3 storm by Friday.
But later, crude prices rose to a three-month high on forecasts that the American Petroleum Institute (API) and the Energy Information Administration (EIA) will soon reveal a better view of the extent of Harvey's impact on USA fuel inventories, although analysts say it will take a few weeks longer to get a complete picture.
October West Texas Intermediate crude rose 6 cents, or 0.1%, to settle at $US47.29 a barrel on the New York Mercantile Exchange. In worldwide oil markets, Brent crude futures dipped 19 cents to Dollars 53.19 a barrel.
"We project that the hurricane will have added 40 million barrels to USA crude inventories in the month following landfall", the analysts said.
The closures pushed the prompt-month spread between West Texas Intermediate crude CLc1 and Brent crude LCOc1 to the widest in two years at almost $6 a barrel last week, prompting Asian traders to hunt for competitively priced U.S crude.
Slipping production after a major storm is not unprecedented: US output slipped after Hurricane Dennis in 1999, Hurricane Ivan in 2004 and Hurricane Katrina in 2005, forcing a range of industry and government reactions. "Today, there's a bit of a worry in the short term that there could be an issue around crude supply".
As oil infrastructure damage appeared to be less extensive than some had feared, gasoline futures fell 3.28 per cent to $1.6906 a gallon. Most regions began to see prices increase Monday and can expect to see them continue their climb.
Brent crude ended $1.04, or 2 percent, higher at $53.38 per barrel. Plants in Lake Charles, Louisiana, near Harvey's second landfall last week, were also churning out fuel after briefly reducing activity.
Though, Irma hasn't hit USA mainland yet, just the fear of the tropical threat could further raise already-high gas prices. In September 2005, prices rose by nearly 30% within three trading days after the landfall of Hurricane Rita before similarly declining. Another storm is developing behind Irma in the Atlantic, and an area of bad weather in the southwest Gulf of Mexico threatens to become a tropical storm in the next two days.