Oil prices slightly up after hurricane hits US oil-rich Gulf Coast

By Al Mayadeen English
Source: Agencies
13 Sep 2024 23:35

UBS Bank projects that crude production in the US Gulf of Mexico could decrease by 50,000 barrels per day due to Hurricane Francine.

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The sun sets behind two under-construction offshore oil platform rigs in Port Fourchon, LA, United States in 2010 (AFP)

Crude oil prices recorded a weekly gain, breaking a two-week losing streak, driven by concerns over a potential short-term reduction in US oil production after a hurricane affected the Gulf of Mexico, home to many energy platforms.

The US West Texas Intermediate (WTI) and UK North Sea Brent crude benchmarks declined at Friday’s close in New York but posted gains for the week overall. However, they bounced back after Hurricane Francine swept through the US Gulf Coast this week, halting over 40% of the region's oil production.

WTI closed 0.5% lower at $68.65 per barrel after hitting a near three-year low earlier in the week but still posted a 1.4% weekly gain following a 12.4% drop over the previous four weeks. Similarly, Brent fell 0.5% to $71.61 per barrel after reaching its lowest level since December 2021, yet managed a 0.7% weekly increase, rebounding from an 11% decline over the prior three weeks.

UBS Bank projected that crude production in the US Gulf Coast could decrease by 50,000 barrels per day due to Hurricane Francine, with other estimates indicating a potential shortfall ranging from 60,000 to 1.69 million barrels per day.

Despite this production decline, analysts were split on the outlook for crude prices in the coming week, with Friday's market volatility—where prices rose by 2% before falling—underscoring the uncertainty in the market.

“My take is that … the [oil] markets [are] extremely overdone to the downside,” Phil Flynn, an energy analyst at the Price Futures Group in Chicago, predicted that the rally would persist, pushing WTI and Brent prices into the higher $70 range.

However, Scott Shelton, a crude trader and opinion writer for US-based firm ICAP, expressed uncertainty about the outlook.

“This market appears unwilling to let anyone with more than 1-day time horizon make money,” Shelton wrote. “They blew longs out last week and sapped their convictions that strong physical and low general stocks were meaningful and are now generating pain for the shorts from the longer-term macro side.”