Oil Holds Steady as Investors Weigh Supply Disruptions and Weak Chinese Demand
Oil prices remained stable in early trading on Tuesday as investors balanced the impact of supply disruptions caused by Tropical Storm Francine against ongoing concerns about weak demand from China.
Brent crude futures edged up by 16 cents, or 0.22%, to $72.00 per barrel as of 0004 GMT, while U.S. West Texas Intermediate (WTI) crude futures gained 12 cents, or 0.17%, reaching $68.83 per barrel. Both benchmarks had closed Monday’s session up by around 1%.
The U.S. Coast Guard ordered the shutdown of operations at Brownsville and other smaller ports in Texas on Monday evening as Tropical Storm Francine moved across the Gulf of Mexico. Though the Port of Corpus Christi remained open, restrictions were imposed.
The National Hurricane Center (NHC) predicted that the tropical storm would intensify over the coming days, potentially developing into a hurricane by Monday night or early Tuesday.
Oil companies have already responded to the storm. Exxon Mobil announced the shutdown of production at its Hoover offshore platform, while Shell paused drilling operations at two platforms. Chevron also began halting oil and gas production at two of its offshore sites.
“At least 125,000 barrels per day (bpd) of oil capacity is at risk of disruption,” analysts from ANZ stated, citing data from the NHC.
Meanwhile, global commodity traders Gunvor and Trafigura indicated that oil prices might fluctuate between $60 and $70 per barrel due to weakened demand from China and continued global oversupply, as discussed at the Asia Pacific Petroleum Conference (APPEC) on Monday.
Experts at the APPEC event highlighted China’s shift toward lower-carbon energy sources and its sluggish economic growth as factors curbing oil demand in the world’s largest crude importer. Goldman Sachs’ head of oil research, Daan Struyven, noted that China’s annual oil demand growth has slowed significantly, from 500,000-600,000 bpd before the COVID-19 pandemic to just 200,000 bpd today.
Additionally, refining margins in Asia have dropped to their lowest seasonal levels since 2020, further reflecting the softening demand in the region.
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