Oil prices saw an increase on Thursday as concerns arose over possible supply disruptions in the United States due to Hurricane Francine. The storm, which made landfall along the US coast, continues to move further inland, raising fears about its impact on the world’s largest crude oil consumer.
Brent crude, the international benchmark, rose by 1.42%, reaching $71.61 per barrel by 10:02 a.m. local time (0702 GMT), up from the previous session’s close at $70.61. Similarly, West Texas Intermediate (WTI), the US benchmark, saw a 1.35% increase, trading at $68.22 per barrel after closing at $67.31 the day before.
Hurricane Francine originated in the Gulf of Mexico and quickly intensified into a category 2 storm, hitting the state of Louisiana on Wednesday evening. In response, the US government declared a state of emergency for Louisiana and Mississippi, advising residents to prepare for heavy rainfall and possible tornadoes. This severe weather is a major concern for oil production, with the potential for significant interruptions.
The Bureau of Safety and Environmental Enforcement (BSEE) has been closely monitoring oil and gas operators in the Gulf of Mexico, who have begun evacuating platforms and rigs. Due to the storm, roughly 38.56% of crude oil production and 48.77% of natural gas production in the region have been halted.
However, further price increases are limited by data showing a drop in demand. The Energy Information Administration reported an increase of 800,000 barrels in US commercial crude oil inventories for the week ending 6 September. In addition, strategic petroleum reserves and gasoline inventories rose by 300,000 and 2.3 million barrels, respectively.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
