Oil Prices Rise Amid Hurricane Francine Concerns, but Demand Worries Limit Gains
Oil prices edged higher during Asian trading on Thursday, driven by concerns that Hurricane Francine could disrupt production in the United States, the world’s largest crude producer. However, worries over weakening demand capped further gains.
Brent crude futures for November delivery climbed 40 cents, or 0.6%, to $71.01 a barrel by 0330 GMT. Meanwhile, U.S. crude futures for October rose 32 cents, or 0.5%, to $67.63 a barrel.
Both benchmarks surged by over $1, or more than 2%, in the previous session as offshore oil platforms in the U.S. Gulf of Mexico were shut down and refinery operations along the coast were disrupted following Hurricane Francine’s landfall in southern Louisiana on Wednesday.
“WTI and Brent have found some support due to concerns over disrupted U.S. oil supplies,” said Priyanka Sachdeva, senior market analyst at Phillip Nova, a Singapore-based brokerage. She noted that the affected region accounts for around 15% of U.S. oil production, with any disruptions likely tightening supplies in the short term.
However, with the storm expected to dissipate after making landfall, market focus shifted back to concerns over lower demand.
The U.S. Energy Information Administration reported on Wednesday that U.S. oil stockpiles rose across the board last week due to increased crude imports and a dip in exports. Additionally, gasoline demand fell to its lowest level since May, while demand for distillate fuel also declined, with refinery runs slowing. The U.S. remains the world’s largest oil consumer, and such figures heightened demand concerns.
Earlier in the week, the Organization of the Petroleum Exporting Countries (OPEC) lowered its forecast for global oil demand growth in 2024, marking its second consecutive downward revision. The group also trimmed its outlook for 2023 demand growth.
“Traders are now turning their attention to the International Energy Agency’s monthly market report later this week, seeking further indications of a weakening demand outlook,” ANZ Research stated in a note on Thursday.
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