Oil prices fell on Friday as traders noted that Hurricane Francine did not appear to have caused significant damage as it passed through the Gulf of Mexico and Louisiana. The price of a barrel of North Sea Brent for November delivery fell 0.50% to $71.61. The price of a barrel of US West Texas Intermediate (WTI) for October delivery fell 0.46% to $68.65.
The market experienced a consolidation session, after its rebound of the two previous days which had allowed WTI to regain almost 5%. In addition to this technical decline, black gold reacted “the fact that Hurricane Francine did not cause much damage to the oil industry infrastructure in Louisiana”said Andy Lipow of Lipow Oil Associates. The hurricane continued to weaken Friday as it moved out of Louisiana, heading north toward Arkansas and Tennessee. “There appears to be no property damage or flooding at our Baton Rouge, Louisiana, area sites.”ExxonMobil said.
“We will have lost between 3 and 5 million barrels”
The group echoed its competitor Shell, which also did not see any deterioration at its Louisiana facilities. At sea, 144 of the 371 offshore platforms remained without their teams, evacuated before the passage of Francine, according to the Office of Safety and Environmental Protection (BSEE). “In the end, we will have lost between 3 and 5 million barrels of crude oil.” compared to usual production, Andy Lipow estimated.
Since the weather event comes at the start of the maintenance season, which sees many refineries slowing down their activity, their oil needs are lower. The restoration of production and transport capacities to refineries will therefore generate only a modest rebound in demand. “So the gains (on the courses) attributable to Francine will essentially deflate”warns Andy Lipow. “Production should return quickly” at its usual level, Carsten Fritsch of Commerzbank anticipated in a note. “So the price support effect should fade away.”
