Satellite image of Hurricane Francine on Sept. 11th, 2024.
NOAA GOES EAST
U.S. crude oil jumped more than 1% to trade above $68 per barrel on Thursday, after Hurricane Francine churned through the Gulf of Mexico, disrupting oil production before making landfall in Louisiana.
Oil futures rose more than 2% in the previous session as the storm threatened supplies. Francine has since been downgraded to a tropical storm.
“Hurricane Francine has likely disrupted about 1.5mn barrels of US oil production, which we estimate will reduce September production in the Gulf of Mexico by around 50,000bpd,” Giovanni Staunovo, an analyst at UBS, told clients in a Thursday note.
Here are Thursday’s energy prices:
- West Texas Intermediate October: $68.13 per barrel, up 82 cents, or 1.22%. Year to date, U.S. crude oil has fallen 4.9%.
- Brent November contract: $71.38 per barrel, up 77 cents, or 1.1%. Year to date, the global benchmark has dropped around 7%.
- RBOB Gasoline October contract: $1.9122 per gallon, up 0.8%. Year to date, gasoline has pulled back nearly 9%.
- Natural Gas October contract: $2.27 per thousand cubic feet, unchanged. Year to date, gas is down about 9.7%.
The quick rebound on the storm came after prices closed at their lowest level since December 2021 on Tuesday. Staunovo said the recent slump may be due to traders losing confidence in OPEC’s ability to maintain compliance with production cuts at lower price levels.
UBS expects oil prices will continue to rise, at least the short term.
“With likely further oil inventory declines ahead as supply lags demand growth, and given low speculative positioning, we retain our positive price outlook—we expect Brent crude oil to move back up above USD 80/bbl over the coming months,” Staunovo said.