WionDrive News Desk 
The global oil market experienced a notable upswing on Thursday, with prices climbing more than one per cent as concerns over Hurricane Francine’s impact on U.S. oil production continued to reverberate through the industry. This increase extended the rebound that began the previous day, although persistent worries about overall demand tempered the gains.
Brent crude futures for November delivery saw an increase of 95 cents, or 1.4 per cent, reaching USD 71.56 per barrel by 1322 GMT. Simultaneously, U.S. crude futures for October delivery rose by USD 1.02, or 1.5 per cent, to USD 68.33. These price movements built upon the more than 2 per cent gain witnessed on Wednesday, a surge prompted by the shutdown of offshore platforms in the U.S. Gulf of Mexico and the disruption of coastal refinery operations as Hurricane Francine made landfall in southern Louisiana.
UBS analysts provided insight into the situation, estimating that Hurricane Francine has likely disrupted approximately 1.5 million barrels of U.S. oil production. This disruption is expected to reduce September production in the Gulf of Mexico by around 50,000 barrels per day (bpd). The analysts maintain an optimistic outlook, predicting that the price of Brent crude oil will surpass USD 80 per barrel in the coming months.
The impact of the hurricane on oil production was significant, with nearly 39 per cent of oil and almost half of natural gas production in the Gulf of Mexico reported offline on Wednesday, according to the offshore regulator. The storm’s severity necessitated the evacuation of 171 production platforms and three rigs.
Priyanka Sachdeva, a senior market analyst at Phillip Nova, a Singapore-based brokerage, emphasized the importance of the affected region, noting that it accounts for about 15 per cent of U.S. oil production. She suggested that any disruptions in production are likely to tighten supplies in the near term.
However, as Hurricane Francine began to dissipate after making landfall, the oil market’s focus started to shift towards concerns over lower demand. This shift in attention was underscored by the International Energy Agency (IEA)’s decision on Thursday to reduce its 2024 oil demand growth forecast by 70,000 bpd, or about 7.2 per cent, to 900,000 bpd. The IEA cited muted Chinese demand as a key factor in this downward revision.
Adding to the complex market dynamics, the U.S. Energy Information Administration (EIA) reported on Wednesday that U.S. oil stockpiles had increased across the board in the previous week. This increase was attributed to growing crude imports and declining exports.
Kelvin Wong, a senior market analyst at OANDA, offered a bearish medium-term outlook for WTI crude, pointing to weak demand from China and “growth scare concerns” in the U.S. as contributing factors. This pessimistic view aligns with recent actions by the Organisation of the Petroleum Exporting Countries (OPEC), which earlier in the week cut its forecast for global oil demand growth for both this year and 2025, marking its second consecutive downward revision.
The impact of these downward revisions was evident in the market, with both oil benchmarks experiencing significant drops on Tuesday. However, the market found some potential support from an unexpected quarter on Thursday, as the European Central Bank announced another interest rate cut. This decision came in response to slowing inflation in the eurozone and faltering economic growth. While the ECB provided little insight into its next steps, the rate cut could potentially stimulate economic growth and, by extension, increase oil demand.
