Oil Closes Lower After Disruptions Caused by Hurricane Francine

Oil prices fell this Friday as U.S. production in the Gulf of Mexico resumed after disruptions caused by Hurricane Francine. This drop was further fueled by the news that the number of active rigs in the country increased this week.

Brent crude closed down by $0.36, or 0.5%, at $71.61 per barrel, while U.S. West Texas Intermediate (WTI) dropped $0.32, or 0.46%, to $68.65 per barrel.

With production and refining activity resuming along the U.S. Gulf Coast, investors opted to offload oil contracts ahead of the weekend, explained Bob Yawger, Director of Energy Futures at Mizuho in New York.

Despite this, oil futures broke a streak of weekly losses thanks to the sharp increases linked to the early-week storms.

According to official data, as of Thursday, the storm had nearly halted 42% of the region’s oil production, which accounts for about 15% of total U.S. output. However, these cuts are expected to be brief, and in the broader context, they are unlikely to trigger significant shifts in oil balances, given the dominance of shale production, which constitutes the majority of U.S. output.

Oil prices were also impacted by the U.S. rig count, released by energy services firm Baker Hughes, which reported the largest weekly increase in a year.

Both the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) lowered their demand growth forecasts this week, citing economic challenges in China, the world’s largest crude importer.

Additionally, U.S. oil inventories saw a broad increase last week, as crude imports rose, exports fell, and fuel demand weakened, according to the U.S. Energy Information Administration (EIA).