Oil prices posted a second straight session of strong gains on Thursday, supported by the passage of Hurricane Francine in a region rich in oil installations, as well as a return of risk appetite. The price of a barrel of North Sea Brent for delivery in November jumped 1.92%, closing at $71.97. The barrel of US West Texas Intermediate (WTI) for delivery in October gained 2.47%, to $68.97.
Hurricane Francine made landfall in Louisiana around 2200 GMT on Wednesday, west of New Orleans, bringing gusts of 160 km/h. Many offshore and onshore facilities had been partially or completely evacuated before the arrival of the weather phenomenon, which was reclassified as a tropical storm shortly after making landfall. An analyst at UBS bank estimated that the shutdown of production on offshore platforms would deprive the market of about 1.5 million barrels. However, no operator has reported significant damage related to Francine on offshore platforms. “The region where it made landfall is dense with infrastructure.”mainly storage sites and refineries, recalled Bart Melek of TD Securities, which increases the risk of disruptions in the crude transformation cycle.
“Risk taking”
Black gold was also boosted by “a vast movement of risk-taking” on the markets “which affects all asset classes”according to the analyst. Investors are encouraged by the approach of a cycle of rate cuts from the American central bank (Fed), which will ease financing conditions and promote consumption and borrowing.
One of the indicators of the day, new jobless claims in the United States, showed that the American labor market was calming but not faltering. The Fed’s office in Atlanta anticipates growth of 2.5% at an annualized rate in the third quarter, more than the major Western economies.
These factors have taken precedence over the publication of the monthly report from the International Energy Agency (IEA), which lowered its forecast for crude demand for 2024. Despite the surge of the last two days, Bart Melek warns that oil is not out of the woods. “The market lacks certainty about the health of the economy” in the coming months, he said.
