Oil prices experienced a significant surge on Thursday, with Brent crude futures for November rising by 1.4% to reach $71.56 per barrel, and U.S. crude futures for October increasing by 1.5% to $68.33. This uptick follows a rise of over 2% on Wednesday due to the closure of offshore platforms in the U.S. Gulf of Mexico and disruptions to coastal refinery operations caused by Hurricane Francine making landfall in southern Louisiana.
Observers estimate that Hurricane Francine may have disrupted approximately 1.5 million barrels of U.S. oil production, leading to an anticipated reduction of around 50,000 barrels per day (bpd) in September production in the Gulf of Mexico. As a result, nearly 39% of oil and close to half of natural gas production in the Gulf of Mexico was offline on Wednesday.
While the hurricane’s impact has led to a tightening of supplies in the near term, concerns about lower demand have begun to emerge, particularly as the International Energy Agency (IEA) reduced its 2024 oil demand growth forecast by 70,000 bpd, citing sluggish Chinese demand. Additionally, the Energy Information Administration (EIA) reported an increase in U.S. oil stockpiles, further contributing to demand worries.
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Furthermore, OPEC’s downward revision of its forecast for global oil demand growth has added to the bearish sentiment, with the European Central Bank cutting interest rates in response to slowing inflation and economic growth in the euro zone. This move is aimed at stimulating economic growth and potentially increasing demand for oil.
