Hurricanes trigger short-covering in crude oil, Cushing crude inventories continue to decline, and WTI crude oil surges nearly 3% intraday.

On Wednesday, WTI crude oil surged nearly 3% intraday to $67.74 per barrel—the largest one-day gain in two weeks. Brent crude rose 2.5% to $70.92 per barrel. By market close, October WTI futures settled up $1.56, or 2.37%, at $67.31 per barrel; October Brent futures settled up $1.42, or 2.05%, at $70.61 per barrel. News-wise, Hurricane Francine threatened Louisiana, prompting shutdowns of some oil facilities in the Gulf of Mexico and triggering short-covering—halting the steep decline in oil prices seen since late August. Hurricane Francine is approaching Louisiana and is expected to make landfall Wednesday afternoon or evening local time, potentially bringing life-threatening storm surge and flooding. Coastal areas of Louisiana—especially the eastern region—are preparing for the hurricane. The U.S. National Hurricane Center issued a warning at 4 p.m. CDT in Houston, stating that life-threatening storm surge and hurricane-force winds will strike Louisiana later Wednesday. The storm has forced closures of several offshore oil platforms in the Gulf of Mexico, though it may spare major LNG export facilities. Industry estimates suggest the storm’s track could disrupt dozens of offshore oil drilling platforms, with as many as eight onshore refineries facing uncertain operational status. Oil companies shut down approximately 40% of Gulf of Mexico crude production ahead of the storm. In recent days, ExxonMobil, Shell, and other offshore operators have evacuated personnel and suspended operations. Criterion Research notes that, in addition to impacts on oil production, natural gas output in the Gulf of Mexico has also declined sharply. Commodity analyst Giovanni Staunovo wrote on X: According to offshore operator reports submitted as of 11:30 a.m. CDT today, personnel have been evacuated from 171 of the Gulf of Mexico’s 371 manned platforms—46% of the total.

2026 U.S. Hurricane Season Energy Impact Handbook: Disruption Pathways Across Refineries, Crude Oil, and Natural Gas Markets

Refining stocks typically outperform during hurricane approach and landfall. At the sector level, refining stocks generally outperform the broader energy sector around major hurricane landfalls (see Figure 8). On average, refining stocks rise about 3.5% ahead of landfall and peak at roughly 5.5% within one week after landfall. However, this outperformance usually reverses within approximately two weeks post-landfall, as capacity resumes and margins normalize. 03 Hurricane Impacts on Crude Oil Production Offshore crude production typically declines ahead of hurricanes but recovers rapidly. U.S. Gulf of Mexico crude output stands at about 2 million barrels per day—roughly 14% of total U.S. crude production. Offshore platforms built since 1988 are engineered to withstand Category 5 hurricanes, helping limit prolonged outages. Moreover, improved mooring designs implemented after Hurricanes Katrina and Rita should reduce damage relative to historical experience. Platforms located along the Gulf’s storm path are typically shut down ahead of the storm—but output usually rebounds quickly once weather improves. Beyond platform damage, hurricanes can also disrupt pipeline infrastructure. For oil markets, the net impact depends on the storm’s track and intensity. Reduced U.S. production curtails crude supply, yet refinery shutdowns simultaneously dampen crude demand. If refinery outages persist, U.S. crude inventories may build—exerting downward pressure on prices. △ Figure 7 illustrates hurricane impacts on U.S. offshore crude production. As shown, Hurricanes Katrina, Rita, Gustav, Ike, and Ida all triggered sharp declines in Gulf of Mexico crude output—demonstrating that when storms disrupt offshore platforms and pipeline systems, short-term supply shocks are direct and immediate. △ Source: Fuchun Road No. 97, Morgan Stanley Research △ Figure 8 shows WTI price performance around selected hurricane landfalls. Overall, WTI tends to rise modestly ahead of landfall—reflecting market anticipation of supply disruptions—but post-landfall price action diverges widely, indicating that subsequent price movements depend heavily on actual outage scale, recovery speed, and demand-side developments. △ Source: Fuchun Road No. 97, Morgan Stanley Research 04 Hurricane Impacts on U.S. Natural Gas Natural gas supply may also be affected by storms. Gulf of Mexico natural gas output averages about 2 billion cubic feet per day—roughly 2% of total U.S. natural gas production. Similar to crude oil, output often declines ahead of storms but typically rebounds swiftly once weather improves. However, we believe demand-side disruptions pose a greater risk. Currently, LNG feedgas demand accounts for about 17% of total U.S. natural gas consumption—and is projected to rise to roughly 24% by 2030. Impacts on LNG export facilities tend to be brief, as most are designed to withstand extreme weather—though severity varies with storm intensity and landfall location. Additionally, the U.S. Gulf Coast hosts substantial industrial natural gas demand—including petrochemicals, fertilizer production, and refining. Industrial facility shutdowns and power outages may suppress demand, often for longer durations than offshore production outages—yet historically, overall impacts have remained relatively mild. Industrial demand across Gulf Coast states (FL, AL, MS, LA, TX) totals approximately 10 billion cubic feet per day—about 10% of total U.S. natural gas consumption.

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Hurricane Isaias threatens US Gulf Coast oil and gas assets as it strengthens to a Category 2 storm. Chevron is evacuating personnel while nearly 10% of regional oil production remains shut in ahead of potential disruptions.

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