Oil Prices Rise Amid Supply Concerns

Oil prices increased in early US trade on Thursday, driven by expectations of supply disruptions following Hurricane Francine, despite ongoing worries about slowing global crude demand.

Hurricane Francine made landfall in Louisiana on Wednesday, leading several oil companies to limit or suspend operations in its path. The anticipation of tighter supplies helped crude prices rebound from near three-year lows touched earlier in the week, though this rally seems to be losing momentum.

By 10:00 ET, Brent oil futures for November rose 0.6% to $71.06 per barrel, while West Texas Intermediate crude futures climbed 0.8% to $67.84 per barrel.

US Inventories Grow Less Than Expected, Product Stockpiles Surge

Crude’s advance was tempered by government data that indicated a bigger-than-expected rise in gasoline and distillate stockpiles for the week ending September 6. Although overall inventories increased slightly less than expected, the surge in product inventories raised concerns about cooling US fuel demand as the summer travel season ends.

This data also suggested that a weakening US economy could lead to lower fuel consumption in the upcoming months. Fears of a US recession weighed significantly on oil prices throughout the previous week. Additionally, stronger-than-expected consumer inflation data released on Wednesday led to speculation about a smaller interest rate cut by the Federal Reserve, which boosted the dollar and further pressured crude prices.

IEA Cuts Demand Forecast

Attention on Thursday shifted to a monthly report from the International Energy Agency (IEA), which reduced its full-year oil demand growth forecast by approximately 7.2% to 900,000 barrels per day, attributing this revision to weak demand from China, the top oil importer.

This report followed a recent cut in demand growth forecasts from the Organization of the Petroleum Exporting Countries (OPEC) for 2024 and 2025, citing similar concerns regarding China. Recent economic indicators from China, especially those showing slower-than-expected import growth in August, have increased anxiety over oil demand this week. Other data suggested that the world’s second-largest economy remains under pressure throughout the month.

Ambar Warrick contributed to this report.