Oil Prices Climb as Hurricane Francine Threatens Supply
Oil prices rebounded amidst supply risk in the global commodities market. Brent climbed higher above US$70 per barrel yesterday and the front-month contract settled more than 2% higher on the day, according to ING.
Supply risks from Hurricane Francine in the US Gulf of Mexico nudged crude oil prices higher amidst uncertainties in demand. Weak economic indicators suggest a bearish expectation from the world largest oil consumers – China and the United States.
Downward price movements were also influenced by OPEC’s revision to its global oil demand growth forecast for this year. The group lowered its forecast by 80,000 bpd from the previous month’s assessment.
Analysts believe that Hurricane Francine supported the rally in the market and provided another reason. According to the Bureau of Safety and Environmental Enforcement, the hurricane has seen almost 675k b/d oil production shut-in. That is equivalent to 39% of the US Gulf of Mexico’s output.
The EIA’s latest weekly storage report was fairly bearish. US commercial crude oil inventories increased by 833k barrels over the week, and there were also builds in refined products.
Gasoline and distillate stocks increased by 2.31 million barrels each. Implied gasoline demand also fell by 460,000 barrel per day week on week to 8.48 million barrel per day.
This is the weakest level since seen April, according to ING commodities strategist and not too surprising as market moves towards the end of the driving season.
The US energy agency will release its latest monthly oil market report later today. The market will be keen to see what the agency’s latest views are on demand as well as the outlook for 2025.
The EIA will also release its weekly US natural gas storage report today, and expectations are that natural gas inventories increased by around 48 bcf over the last week.#Oil Prices Climb as Hurricane Francine Threatens Supply
