At around 17:00 Central Time on September 11th, Hurricane Francine made landfall in the Trepone Parish in southern Louisiana. The maximum sustained wind speed during hurricane landfall is close to 161 kilometers per hour. Subsequently, it weakened to a Category 1 hurricane with maximum wind speeds dropping to 145 kilometers per hour. At the same time, the National Hurricane Center said that the life-threatening storm surge, rainstorm and hurricane scale gales will continue to affect some areas.

Due to the impact of hurricanes, about 42% of crude oil production facilities in the Gulf of Mexico in the United States have been closed, and oil prices have rebounded recently. On Thursday, WTI crude oil rose to a intraday high of $69.02 and ultimately closed up 2.48% at $68.42 per barrel. Currently, WTI crude oil trading is around $69.50.

UBS analyst Giovanni Staunovo told clients in a report on Thursday: "Hurricane Francine may have disrupted approximately 1.5 million barrels of oil production in the United States, and we estimate that this will result in a reduction of approximately 50000 barrels per day in oil production in the Gulf of Mexico in September

UBS predicts that due to inventory decline and supply lagging behind demand growth, oil prices will continue to rise in the short term.

Standard Chartered Bank's commodity analysts believe that the position in the oil futures market has become extreme enough to shift price risk upwards. In addition, they also pointed out that as some OPEC+member countries reduce production, the oil market will further tighten in the coming months.

In July of this year, Russia, Iraq, and Kazakhstan submitted compensation plans for excess crude oil production in the first half of 2024 to the OPEC Secretariat. Analysts say that if all commitments are fulfilled, excess production compensation will result in OPEC production decreasing by 530000 barrels per day in the fourth quarter of 2024, 540000 barrels per day in the first and second quarters of 2025, and 560000 barrels per day in the third quarter of 2025.

Standard Chartered Bank believes that the market's current assumption that compensation will not be reduced is incorrect, and states that Saudi Arabia is unlikely to accept further breaches of commitments by overproduction countries.

Commodity experts pointed out that the recent high-profile visits of the OPEC Secretary General to Iraq and Kazakhstan indicate that OPEC intends to fulfill its promised production cuts.

WTI Crude Oil Daily Chart