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Crude oil prices rose for a second straight session on Thursday as Hurricane Francine forced several offshore wells to shut in production, but gains were capped by lingering concerns about the outlook for crude demand.
More than 730 thousand barrels per day, or 42% of Crude oil production in the U.S. Gulf of Mexico was halted on Thursday, the U.S. Bureau of Safety and Environmental Enforcement said.
Some analysts said Francine’s effect may be short-lived.Crude oil fell to its lowest levels in two weeks, losing intensity quickly after arriving in Louisiana on Wednesday evening, which could turn the oil market’s attention back to the lack of global demand, according to Reuters.
Louisiana’s refined product supply appears to be stable and largely unaffected by the hurricane, with some terminals that had loading operations shut down due to the storm. Return to the Internet or restore operationsAs reported by the Argus newspaper on Thursday.
Exxon Mobil (XOM) said its 523,000-bpd Baton Rouge refinery was operating normally and supplying customers, while Shell (SHEL) said it had not observed any significant damage at its Geismar chemicals plant and its 234,000-bpd Norco refinery in Louisiana, according to Argus.
Chevron Corp (CVX) said its 357,000 barrel-per-day refinery in Pascagoula, Mississippi, is operating and supplying customers, and Citgo Inc. said its 455,000 barrel-per-day refinery in Lake Charles, Louisiana, was undamaged and is returning to normal operations, Argus also reported.
While details are not yet known regarding the Louisiana terminals operated by Marathon Petroleum (MPC), PBF Energy (PBF), Valro (VLO), and Delek (DK), Argus reports that market participants expect a return to normal operations in the coming days.
US light crude oil contracts for October delivery (CL1:COM) closed +2.4% To $68.97 per barrel, the price of Brent crude for November (CO1:COM) ended +1.9% to $71.97 a barrel, the best settlement for the two benchmarks in a week.
U.S. natural gas futures rose to a two-month high, with the October Nymex contract closing higher. +3.8% to $2.357/MMBtu, supported by lower-than-estimated inventory builds and expectations of limited demand impact from the hurricane.
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The International Energy Agency also announced on Thursday It lowered its forecast for demand growth in 2024. U.S. crude oil production rose more than 7 percent to 900,000 barrels per day, citing weak demand in China and weak growth elsewhere.
The International Energy Agency estimated that China’s oil demand will grow by only 180,000 barrels per day this year, much lower than its previous growth forecast of 410,000 barrels per day. China’s oil consumption fell on an annual basis for the fourth straight month in July, compared with an annual growth rate of 1.5 million barrels per day in 2023.
The United States is also showing signs of weak demand, with crude inventories rising last week as crude imports grew and fuel demand fell, the Energy Information Administration said Wednesday.