Oil up with concerns of supply halt in US amid hurricane warning

By Zeynep Beyza Kilic

Oil prices increased on Thursday amid concern over supply disruptions in the US, the world's biggest crude consumer, caused by Hurricane Francine which reached the US coast and continues to move inland.

International benchmark Brent crude increased by 1.42% to $71.61 per barrel at 10.02 a.m. local time (0702 GMT), up from the previous session's close of $70.61.

US benchmark West Texas Intermediate (WTI) rose 1.35% to $68.22 per barrel after closing at $67.31 in the prior session.

The extreme weather event started at the Gulf of Mexico and quickly grew to a category 2 storm once it reached the US coastal state of Louisiana on Wednesday at 17.00 local time (2300 GMT), the National Hurricane Center (NHC) announced.

The US issued a state of emergency for Louisiana and neighboring Mississippi urging residents to be prepared for rainfall and potential tornadoes.

The severity of the storms pushed oil prices higher with the threat of an interruption to oil and natural gas production in the US.

The Bureau of Safety and Environmental Enforcement (BSEE) said Wednesday they are monitoring offshore oil and gas operators in the Gulf of Mexico as they evacuate platforms and rigs in response to the storm.

BSEE said that approximately 38.56% of crude oil production and 48.77% of natural gas production in the US Gulf of Mexico were offline due to the storm.

Meanwhile, data indicating a drop in demand in the US caps further price surge.

US commercial crude oil inventories increased by 800,000 barrels, during the week ending Sept. 6, according to the Energy Information Administration.

Over the same period, strategic petroleum reserves and gasoline inventories climbed by 300,000 and 2.3 million barrels, respectively.