Oil prices experienced a second consecutive day of gains following Hurricane Francine’s impact on crude supply in the Gulf of Mexico. Brent crude increased to over $71 a barrel after a 2.1% rise in the previous session, while West Texas Intermediate (WTI) traded close to $68.
Hurricane Francine, which made landfall in Louisiana on Wednesday, led to the shutdown of approximately 670,000 barrels per day of production in the Gulf of Mexico, according to the US Bureau of Safety and Environmental Enforcement. This disruption accounts for more than one-third of the region’s oil output.
Despite these gains, crude oil prices remain significantly lower year-to-date, driven by growing concerns about weakening demand from China, the world’s largest oil importer, and indications of a slowdown in the US economy, which has heightened market volatility.
The International Energy Agency (IEA) reported on Thursday that global oil demand growth is decelerating sharply as China’s economy cools. The IEA also forecasted a potential oil glut next year, even if OPEC+ extends its supply cuts. In response to the recent price drop, OPEC+ has postponed its planned easing of supply constraints by two months.
Ole Hansen, head of commodities strategy at Saxo Bank, noted, “The market now needs to face the question of whether too much negativity has been priced in at current levels. The IEA was not particularly optimistic, confirming that the slowdown is primarily a China-related issue. With the impact of Francine likely diminishing in the coming days, the market remains susceptible to potential new selling pressure.”
Thursday’s oil price increase, which positions Brent crude for its first consecutive daily gain since August 23, coincided with a rally in stock markets. A surge in technology stocks on Wall Street has spread across global markets, with investors anticipating that the Federal Reserve may start cutting interest rates next week.
Related topic:
What Is The Best Diesel Additive For Lubricity?
