Oil prices climbed 2% early Thursday morning as Tropical Storm Francine landed on the coast of Louisiana.
Earlier in the week, media reported that field operators in the Gulf were evacuating crews from offshore platforms ahead of the storm. Chevron, Shell, and Exxon were among the companies that paused work on some platforms in anticipation of the storm.
Woodside Energy shut in an offshore oil platform in the Gulf of Mexico ahead of Francine’s landfall.
On Tuesday, Reuters reported that Exxon planned to slash production at the 522,500-bpd facility to just 20% of capacity ahead of Francine’s landfall. “We’re closely monitoring and preparing for severe weather that may impact our Baton Rouge operations,” an Exxon spokeswoman told Reuters. “Our primary focus is the safety of our workforce and communities in the affected areas. We continue to meet customer commitments.”
A total of six refineries in Louisiana reduced operating rates ahead of the storm, operating with minimum staff until Francine made landfall.
Port Fouchon in Louisiana, which handles equipment supply to offshore platforms, among other things, was shut down ahead of Francine’s landfall, as was the Louisiana Offshore Oil Port, Reuters reported late on Wednesday. Five other ports in Louisiana also remained shut, including New Orleans, Plaquemines, Cameron, Lake Charles, and Houma.
According to one analyst from East Daley Analytics, the hurricane’s impact on oil and gas production in the area could extend to two weeks, Reuters reported before Francine’s landfall. Since it made landfall as a Category 2 storm, there is a chance that impact won’t last that long, even though the Governor of Louisiana has declared a state of emergency for the state.
The immediate impact on prices has been somewhat muted, however, MarketWatch noted in a report, citing a portfolio manager from SIA Wealth Management as saying that “traders are more concerned that falling demand could lead to oversupply in the market.”
“In that case, supply reductions do not matter as much as they would in times of high demand.” Colin Cieszynski also said.
By Michael Kern for Oilprice.com
