By Erwin Seba
HOUSTON (Reuters) -Oil prices rose more than 2% on Wednesday, driven by fears of extended production shutdowns in the U.S. offshore oil patch, where Hurricane Francine tore through on its way to landfall in Louisiana.
futures settled at $70.61 a barrel on Wednesday, up $1.42, or 2.05%. futures rose $1.56 a barrel, or 2.37%, to $67.31.
Oil prices shrugged off a surge in crude inventories on Wednesday morning, as reported by the U.S. Energy Information Administration.
Crude oil inventories rose 833,000 barrels to 419.1 million barrels in the week ended September 6, the EIA said, compared with analysts’ expectations in a Reuters poll for a rise of 987,000 barrels.
Crude oil inventories at the Cushing, Oklahoma, delivery center fell by 1.7 million barrels this week.
“A rather unexciting little expansion in crude inventories has been overshadowed by yet another draw at Cushing,” said Matt Smith, chief oil analyst at Kpler. “EIA data shows that Cushing’s inventories have now declined nine of the past 10 weeks, falling to the lowest level since early November of last year.”
Both oil benchmarks fell on Tuesday, with Brent falling below $70 to its lowest price since December 2021 and US crude falling to its lowest level since May 2023, after OPEC revised its 2024 oil demand growth forecast for a second time had been adjusted downwards.
Concerns about Hurricane Francine disrupting production in the United States, the world’s largest producer, also lent support, other analysts said.
“Next week, I suspect the statistics will be affected by Hurricane Francine interrupting the flow of tankers through the Gulf of Mexico,” said Andrew Lipow, president of Lipow Oil Associates.
The U.S. Bureau of Safety and Environmental Enforcement said 39% of crude oil production in the Gulf of Mexico was shut Wednesday as companies evacuated crews from Francine’s path.
The agency also said 49% of Gulf production was shut down by the storm.
According to EIA, the U.S.-regulated northern Gulf of Mexico is responsible for 15% of total U.S. crude oil production and 2% of dry natural gas production.
