Benchmark oil prices headed higher on Wednesday, as Hurricane Sally forced US offshore producers to shut down their operations.
More than a quarter of US oil and gas production offshore in the Gulf of Mexico was closed on Tuesday, according to Reuters. Export ports were also closed with the storm brewing off the Gulf Coast.
Concerns over the hit to output pushed up the cost of widely traded oil futures contracts.
West Texas Intermediate Crude prices (CL=F) continued to rise on Wednesday, up 2.2% to $39.12 (£30.36), while brent futures (BZ=F) were up 1.9% to $41.29 (£32.04) at around 3.15am eastern time in the US (8.15am in the UK).
Rystad Energy predicted a total outage of between 3 million and 6 million barrels over the course of an 11-day period.
The US National Hurricane Center said the storm continued to strengthen and had intensified to reach speeds of 105mph, with “historic life-threatening flooding likely” along parts of the northern Gulf Coast.
Hurricane conditions have now spread onshore in parts of Florida and Alabama, it added in a recent update.
Hurricane #Sally Advisory 20: Sally Continues to Strengthen as Hurricane Conditions Spread Onshore the Gulf Coast From Pensacola Beach Florida Westward to Dauphin Island Alabama. https://t.co/VqHn0u1vgc— National Hurricane Center (@NHC_Atlantic) September 16, 2020
It comes less than a month after Hurricane Laura forced the evacuation of hundreds of offshore facilities in late August. Prices at the time briefly hit their highest prices since early March.
But the International Energy Agency revised down its oil demand forecasts for the second half of 2020 on Tuesday.
It said the outlook was “even more fragile” than a month earlier, with the pandemic, more home-working, a weak aviation sector and lower Chinese demand for crude knocking expected growth.
“The uncertainty created by COVID-19 shows little sign of abating,” said the IEA report.