An End To a Four-Week Losing Streak for Oil?

This week, crude oil prices experienced notable volatility, with a mix of supply-side disruptions and ongoing demand concerns shaping the market.

While temporary supply constraints provided some upward pressure, weak global demand, particularly from China, weighed heavily on price momentum.

Hurricane Francine’s Impact on U.S. Oil Supply

Hurricane Francine was a significant catalyst driving oil prices higher midweek. The storm, which hit the U.S. Gulf of Mexico, led to the shutdown of approximately 730,000 barrels per day (bpd) of oil production.

This represented around 42% of the region’s total output, with additional disruptions in natural gas production also reported.

Key U.S. oil firms, including Chevron and ExxonMobil, were forced to halt operations and assess potential damage to offshore platforms and refineries??. As a result, crude oil futures rose by more than 2%, with prices briefly climbing above $68 per barrel?.

Despite the supply concerns caused by Francine, the storm was downgraded to a tropical depression, and much of the Gulf of Mexico’s production is expected to come back online relatively quickly. Traders have already begun to shift focus away from the storm, looking instead at the broader demand outlook??.

U.S. Inventory Draws Support Price Increases

Adding to the supply-side pressure was a substantial drawdown in U.S. crude inventories.