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Mars crude climbs to four-month high on storm-related output losses

HOUSTON (Reuters) - Mars Sour, a U.S. Gulf of Mexico crude grade, firmed to the strongest in four months on Monday as traders focussed on offshore production losses caused by a tropical storm and a minimal disruption to refining.

Mars barrels for delivery in August traded as strong as $7.50 a barrel over U.S. benchmark futures, up from as much as $6.50 on Friday. The prior peak spread to WTI was $7.75 a barrel on March 14 in the aftermath of U.S. sanctions cutting Venezuelan crude imports.

Oil producers shut as much as three-quarters of the Gulf's crude output in response to Tropical Storm Barry, bringing production down 9.2 million barrels during and after the storm, according to estimates by offshore drilling regulator Bureau of Safety and Environment Enforcement (BSEE).

Disruptions to Gulf Coast refining were minimal, with only Phillips 66's <PSX.N> 247,000 bpd Alliance refinery on the coast south of New Orleans shutting down for several days.

"The demand is still there, but supply was shut off for the better part of a week," a trader said. "That's a problem."

A slower-than-expected restart of operations also supported prices after the storm passed, traders said.

"The crew were back on the platforms, but some connections between the platforms did not work," another trade source said, adding it took some platforms "longer to come back online."

(Reporting by Collin Eaton in Houston and Devika Krishna Kumar in New York; editing by Grant McCool)