UPDATE 11-Oil jumps $3 to 5-week high on storm concerns, Europe

Wed Sep 7, 2011 10:42pm BST

 * Tropical Storm Nate forms in Bay of Campeche-NHC
 * New storm stirs worry over Lee recovery
 * Germany's top court soothes way for euro zone help
 * U.S. crude stocks fell sharply last week-API
 * Coming Up: EIA oil stocks data at 11 a.m. Thursday
 (Updates with formation of Tropical Storm Nate, paragraph 2)
 By David Sheppard
 NEW YORK, Sept 7 (Reuters) - Oil rose by more than $3 to a
five-week high on Wednesday, boosted by production outages in
the Gulf of Mexico and tracking a surge in equity markets after
a ruling by Germany's top court soothed euro zone fears.
 Traders were eyeing the formation of Tropical Storm Nate
over Mexico's Bay of Campeche, which the U.S. National
Hurricane Center said may move toward the U.S. Gulf Coast and
had chance of becoming a hurricane by Friday. [ID:nL3E7K73WJ]
 Although Nate was far south of U.S. oil installations, it
stirred fears it could further hamper the slow recovery of
production in the region after Tropical Storm Lee had hit.
 "This is going to make it difficult to get people back on
rigs -- it looks like we could have an extended period of
having production offline" said Phil Flynn, analyst at PFGBest
Research in Chicago.
 Stockpiles of U.S. crude fell by 3 million barrels last
week due to production shut-ins and lower imports, industry
group the American Petroleum Institute said. [API/S]
 That was well above the average forecast of a 1.9 million
barrel draw in a Reuters poll ahead of the more closely watched
data from the U.S. government's Energy Information
Administration on Thursday at 11 a.m. EDT (1500 GMT). [EIA/S]
 Brent crude LCOc1 gained $2.91 to settle at $115.80 a
barrel. In post-settlement trade after the API numbers, prices
rose further, pushing on to $116.50, the highest price since
Aug. 2. U.S. crude CLc1 rose $3.32 to settle at $89.34 a
barrel and also climbed in post-settlement trade to a five-week
high of $90.48.
 "The market is being very reactive to the developing
storms, due, in part, to the declining crude inventories," said
John Kilduff, a partner at Again Capital LLC in New York.
 Brent settled above its 100-day moving average, a key
technical indicator that has capped the market since August.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
 For a 24-hour technical outlook on Brent:
 r.reuters.com/zej63s
 For a 24-hour technical outlook on WTI:
 r.reuters.com/buj63s
 Factbox on US Gulf offshore energy restart [ID:nN1E7851AX]
 Reuters hurricane tracker:  www.reuters.com/san78n
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 Oil was also supported by a near 3 percent gain in U.S. and
European equities after Germany's top court struck down
internal efforts to block Berlin from helping stabilize the
euro zone. Many oil traders use broader markets to try and
gauge the strength of the economic recovery. [ID:nL5E7K70Q9]
 That has led to heightened volatility in the oil market for
much of the past month, as investors have been torn between
lackluster economic data in the developed world and increased
efforts to find a lasting solution to the euro zone crisis.
 "Despite the fact people aren't particularly optimistic
about the overall economy, it's been hard to push oil prices
down," Peter Beutel, president of oil consultancy Cameron
Hanover said.
 The S&P 500 .SPX was up 2.9 percent, while gold XAU= --
which has seen safe haven flows push it to a series of record
highs in recent weeks -- was down more than 3 percent at
$1,813.60 an ounce.
 PRODUCTION AND INVENTORIES
 More than 500,000 barrels per day or almost 37 percent of
oil production in the Gulf of Mexico remained shut from Lee,
which came ashore and weakened on Sunday, the U.S. government
reported on Wednesday. That's down from 60 percent on Tuesday.
 Since companies began to shut in production due to Lee on
Sept. 1, a total of more than 4.5 million barrels of oil
production have been lost, according to Reuters calculations
from government estimates. That's equal to roughly a quarter of
one day's oil use in the United States. [ID:nN1E7851AX]
 Brent's premium over U.S. crude oil CL-LCO1=R fell to
about $26.40 a barrel after hitting a record of more than $27
on Tuesday.
 Brent has been boosted relative to U.S. crude by production
problems in the North Sea over the past few months, as well as
the loss of crude from Libya since February.
 European refiners have had to scramble to find replacements
for the approximately 1.2 million bpd of pre-civil war Libyan
crude oil exports.
 While limited exports from Libya were expected to resume in
the coming months, most industry experts have said it will take
Libya's National Transitional Council at least 12 to 18 months
to return production to 1 million bpd or more.
 (Additional reporting by Matthew Robinson, Robert Gibbons,
Gene Ramos in New York; Simon Falush and Claire Milhench in
London; Francis Kan in Singapore; Editing by Marguerita Choy)