Oil rose by more than $3 to a five-week high 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 eurozone 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. 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 off-line" said Phil Flynn, analyst at PFG-Best Research in Chicago. Stockpiles of U.S. crude fell by three million barrels last week due to production shut-ins and lower imports, industry group the American Petroleum Institute said. 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. Brent crude gained $2.91 US 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 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. Oil was also supported by a near three per cent gain in U.S. and European equities after Germany's top court struck down internal efforts to block Berlin from helping stabilize the eurozone. Many oil traders use broader markets to try to gauge the strength of the economic recovery. That has led to heightened volatility in the oil market for much of the past month, as investors have been torn between lacklustre economic data in the developed world and increased efforts to find a lasting solution to the eurozone 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 was up 2.9 per cent, while gold - which has seen safe haven flows push it to a series of record highs in recent weeks - was down more than three per cent at $1,813.60 an ounce. More than 500,000 barrels per day or almost 37 per cent 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 per cent on Tuesday.

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