Oil Prices Rise Amid Hurricane Concerns

Oil prices increased in early US trade on Thursday as expectations of supply disruptions from Hurricane Francine helped ease worries about declining global crude demand.

Hurricane Francine made landfall in Louisiana on Wednesday after moving through the Gulf of Mexico, prompting several oil companies to limit or suspend operations in its path.

The anticipation of tighter supplies led to a rebound in crude prices from near three-year lows earlier in the week, but this rally appeared to be losing momentum.

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

US Inventories and Product Stockpiles Surge
However, a limiting factor for crude’s advance was the government data indicating a greater-than-expected rise in gasoline and distillate stockpiles for the week ending September 6.

While overall inventories showed a slight increase, the rise in product inventories raised concerns over cooling US fuel demand with the end of the busy summer travel season. Furthermore, worries about a potential weakening US economy could lead to diminished fuel consumption in the months ahead.

Fears of a US recession weighed on oil prices throughout the previous week. Additionally, stronger-than-expected consumer inflation data released on Wednesday bolstered speculation for a smaller interest rate cut by the Federal Reserve in September, which in turn strengthened the dollar and negatively impacted crude prices.

IEA Cuts Demand Forecast
Attention also turned to a monthly report from the International Energy Agency (IEA), which downgraded its full-year oil demand growth forecast by about 7.2% to 900,000 barrels per day due to sluggish demand in leading importer China.

This report followed similar adjustments from the Organization of the Petroleum Exporting Countries (OPEC), which cut its forecasts for oil demand growth in 2024 and 2025, citing concerns over China. Recent weak economic data from China, particularly regarding its import growth rate in August, has added to the week’s anxieties concerning oil.

Ambar Warrick contributed to this report.