UBS analysts estimated that up to 1.5 million barrels of Gulf of Mexico production was disrupted by the storm that hit the southern Mississippi River early Thursday.
U.S. West Texas Intermediate (WTI) crude futures rose $1.66, or 2.47 percent, to settle at $68.97 a barrel. Brent crude futures rose $1.70, or 2.4 percent, to $72.31 a barrel.
Crude futures rose more than 2 percent on Wednesday as companies evacuated more than 171 offshore platforms due to the hurricane. The resulting outages are expected to cut production this month from Gulf of Mexico By about 50,000 barrels per day, according to UBS analysts.
But some analysts noted that Francine’s impact could be short-lived, as it quickly lost steam after hitting Louisiana late Wednesday. That could shift the oil market’s focus back to the global demand slump, Alex Hodes, an analyst at StoneX, told clients in a note.
Oil and fuel export ports from South to Central Texas were already reopening on Thursday, and refineries have begun to increase capacity.
Concerns about weak global oil demand, particularly from China, have weighed heavily on prices in recent months. Brent crude futures settled at their lowest in nearly three years on Tuesday after the OPEC+ alliance of oil producers cut its annual demand growth forecast for a second straight month.
The International Energy Agency cut its forecast for oil demand growth in 2024 by 70,000 barrels per day, or about 7.2 percent, to 900,000 barrels per day in its monthly oil market report on Tuesday. The Paris-based agency attributed the lower forecast to the impact of weak Chinese consumption and weak growth elsewhere.
The United States, the world’s biggest oil consumer, has also shown signs of weak demand. The Energy Information Administration said yesterday that U.S. oil inventories rose last week as crude imports grew, exports fell and fuel demand fell.
Gasoline prices in the United States are heading toward their lowest levels in three years due to weak demand and abundant supplies, analysts said. Gasoline consumption in the United States accounts for about 9 percent of global oil demand.
