Your Daily Energy Report for September 11, 2024
Posted on 2024-09-11
Crude Oil
Crude Oil futures for October settled up $1.56 or 2.373% at $67.31. Oil prices surged on Wednesday amidst concerns of extensive production disruptions in the U.S. offshore oil sector, spurred by the impending landfall of Hurricane Francine in Louisiana. Despite the EIA reporting an increase in crude inventories earlier in the day, market attention was largely fixated on the potential impact on U.S. output. By midweek, companies had shut down approximately 39% of crude oil production and 49% of natural gas production in the Gulf of Mexico as precautionary measures ahead of Francine's arrival. The BSEE indicated that these shutdowns affected operations significantly in the northern Gulf of Mexico, which alone contributes 15% of total U.S. crude oil production and 2% of dry natural gas production. The market sentiment was further fueled by concerns over prolonged disruptions and the resilience of U.S. energy infrastructure amid the impending storm.
Natural Gas
Natural Gas futures for October settled up $.038 or 1.703% at $2.27. Natural gas prices rose on Wednesday, as Hurricane Francine shuts in some production. This increase was influenced by increasing seasonal demand, record levels of LNG exports, and China's expanding use of natural gas for transportation. Despite reaching record production levels, the market anticipates heightened demand growth from industries like power generation and manufacturing, which is expected to create tighter market conditions. Although inventories are slightly higher than average, potential disruptions from Gulf Coast storms and rising export levels could quickly deplete these reserves, placing additional upward pressure on prices.