Oil Prices Rise Amid Supply Concerns

Oil prices rose in Asian trade on Friday, aiming for a positive week close due to supply disruption concerns stemming from Hurricane Francine, which helped crude rebound from near three-year lows.

However, prices were still nursing steep losses from last week and were only slightly above this week’s lows, as ongoing fears over slowing demand hindered oil’s advance.

Current Price Levels

Brent oil futures expiring in November rose 0.8% to $72.57 a barrel, while West Texas Intermediate crude futures increased by 0.9% to $69.58 per barrel by 09:43 ET. Both contracts are on track to potentially break a streak of weekly declines if these gains hold.

Hurricane Francine Disrupts Gulf of Mexico Production

Oil production and refinery activities in the Gulf of Mexico faced significant challenges as Hurricane Francine made landfall in Louisiana earlier this week, although it has since been downgraded to a tropical storm. A number of offshore platforms in the storm's path were evacuated, and operations at crude and natural gas shipping terminals were suspended.

The Gulf of Mexico is responsible for nearly a quarter of all U.S. oil production, and any prolonged production halts could lead to tighter supplies domestically.

Oil Markets Face Demand Concerns

Despite some positive momentum this week, oil prices remained close to three-year lows due to ongoing worries over demand. Weak economic signals from China played a significant role in these concerns, leading traders to brace for potentially lower demand from the world’s largest oil importer.

Both the Organization of the Petroleum Exporting Countries and the International Energy Agency lowered their oil demand forecasts for 2024 in separate reports earlier this week due to concerns surrounding China. However, they noted that demand may increase from other regions in Asia, particularly India, which is experiencing significant economic growth.

In the U.S., a report indicating a substantial build in gasoline and distillate inventories raised worries that domestic fuel demand is slowing, especially with the close of the travel-heavy summer season.

Ambar Warrick contributed to this report.