Global oil markets extended gains Thursday, lifting U.S. crude prices to six-week highs, as a tropical depression that could accelerate into a hurricane heads for the Louisiana coast, forcing the evacuation of key drilling platforms in the Gulf of Mexico.
The National Hurricane Center in Miami has issued a hurricane watch for area around the Gulf coast near the Louisiana-Texas border, indicating the chance for tropical-storm-force winds conditions over the next 48 hours. The potential hurricane, named Barry, could strike the area this weekend while affecting rig and platform operations in the Gulf coast, home to nearly a fifth of the nation's oil production.
The U.S. Bureau of Safety and Environmental Enforcement has estimated that some 600,000 barrels of production have come offline as staff has been removed from platforms and rigs operated Exxon Mobil (XOM) , Chevron Corp. (CVX) and Anadarko Petroleum Corp (APC) . Louisiana Governor John Bel Edwards has also declared a state of emergency in advance of the potential hurricane.
"This is going to be a very significant weather event," said Edwards said late Wednesday. "It would be, in and of itself, but if you look at the fact that we got the elevated Mississippi River and we've had more rainfall in Louisiana over the last several months than normal, you know that it makes it much harder to deal with events of this type."
Brent crude contracts for September delivery, the global benchmark, were seen 22 cents higher from their Tuesday close and changing hands at $67.23 per barrel in early European trading.
West Texas Intermediate crude contracts for August, which are more tightly linked to U.S. gas prices, were marked 33 cents higher, after rising as much as 4.5% yesterday, to change hands at a six-week high of $60.66 per barrel.
The upward price surge, which saw U.S. contracts rise 4.5% yesterday, was given further support from data from the Energy Information Administration which showed domestic crude stocks fell by a much-larger-than-expected 9.5 million barrels last week, following a similar assessment from the American Petroleum Institute on Tuesday.