Oil futures experienced a notable increase early on Monday, climbing by $1 as a potential hurricane approached the U.S. Gulf Coast and markets rebounded from a recent selloff driven by disappointing U.S. jobs data.
By 01:46 GMT, West Texas Intermediate (WTI) crude futures had gained $1, or 1.48%, reaching $68.67 per barrel. Meanwhile, Brent crude futures rose by 99 cents, or 1.39%, settling at $72.05 per barrel.
Analysts attributed the price rebound partly to concerns about a developing hurricane. The U.S. National Hurricane Center reported on Sunday that a weather system in the southwestern Gulf of Mexico is expected to strengthen into a hurricane before reaching the northwestern Gulf Coast. This region is crucial, accounting for approximately 60% of U.S. refining capacity.
“Sentiment has improved somewhat following last week’s decline,” noted independent market analyst Tina Teng. Last Friday, Brent crude had dropped by 10% over the week, hitting its lowest level since December 2021. Similarly, WTI fell by 8%, marking its lowest close since June 2023.
ANZ analysts highlighted that crude oil prices suffered their most significant weekly decline in 11 months, amid concerns over a weakening economic outlook. The previous Friday’s U.S. jobs report showed nonfarm payrolls increased by 142,000 in August, falling short of expectations. Additionally, the July payrolls figure was revised downward to 89,000, marking the smallest gain since a decline in December 2020.
The job market’s performance has led analysts to predict that the Federal Reserve might implement a modest 25 basis point rate cut this month, rather than a more substantial half-point reduction. Typically, lower interest rates stimulate oil demand by boosting economic growth and reducing costs for holders of non-dollar currencies. However, persistent weak demand has limited price increases.
Refining margins in Asia have fallen to their lowest seasonal levels since 2020 due to reduced demand from major economies. Additionally, fuel oil exports to the U.S. Gulf Coast declined to their lowest levels since January 2019 last month, reflecting weaker refining margins.
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