© Reuters. FILE PHOTO: Crude oil storage tanks are seen in an aerial photograph at the Cushing oil hub in Cushing, Oklahoma, U.S. April 21, 2020. REUTERS/Drone Base/File Photo

By Devika Krishna Kumar

NEW YORK (Reuters) -Oil prices edged lower on Thursday, falling from a multi-week high a day earlier on profit taking and as the threat to U.S. Gulf crude production from Hurricane Nicholas receded.

was down 13 cents, or 0.2%, at $75.33 a barrel by 12:43 p.m. ET (1643 GMT.) On Wednesday Brent touched $76.13, its highest since July 30.

U.S. West Texas Intermediate (WTI) slipped by 24 cents, or 0.3%, to $72.37 after climbing to the highest since Aug. 2 on Wednesday.

“With prices now back around summer highs, we are seeing some profit taking kicking in but the rally continues to look well supported,” said Craig Erlam, senior market analyst at OANDA.

U.S. Gulf energy companies have been able to restore pipeline service and electricity quickly after Hurricane Nicholas passed through Texas early this week, allowing them to focus on efforts to repair the damage caused weeks earlier by Hurricane Ida.

“As Nicholas spared U.S. production from further disruptions, it is difficult to see how oil prices can increase further in the near term,” said Rystad Energy analyst Nishant Bhushan. “Ida-affected oil production capacity continues to recover in the U.S.”

Oil jumped on Wednesday, supported by figures showing inventories fell by a bigger than expected 6.4 million barrels last week, with offshore oil facilities still recovering from the impact of Hurricane Ida. [EIA/S]

Brent has rallied 45% this year, supported by supply cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, plus some recovery from last year’s pandemic-related collapse in demand.

Oil is also finding support from a surge in European power prices, which have soared because of factors including low gas inventories and lower than normal gas supply from Russia.

Benchmark European gas prices at the Dutch TTF hub have risen by more than 250% since January.

The price surge and impact on oil “is a situation that I believe will get much worse before it gets better”, said Jeffrey Halley, analyst at OANDA.

Adding to signs of oil demand recovery, closely watched OPEC and International Energy Agency reports this week said global oil use would rise above 100 million barrels per day, a level last reached in 2019, as soon as next year’s second quarter.

“Although much of the OPEC and IEA adjustments are longer term in nature, they are nonetheless worthy of some buying interest despite significant demand risk across the balance of this year related to the delta variant (of coronavirus,)” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

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