Oil prices traded higher on Thursday as prospects of supply disruptions from Hurricane Francine eased ongoing concerns over sluggish demand.
November contract Brent crude oil futures rose 0.86% to $71.22 per barrel, while the US West Texas Intermediate (WTI) crude futures climbed 0.81% to $67.14 per barrel.
The global and US oil benchmarks jumped more than 2% in the earlier session after Hurricane Francine halted around 24% of crude output and 26% of natural gas production in the US Gulf of Mexico before its landfall in Louisiana.
However, with the storm likely to end, some respite in the prices’ recovery is expected, prompting the oil market to return to its focus on global oil demand.
Demand in China, particularly, has faltered as the world’s largest crude importer faced lower oil consumption due to the growing shift to electric vehicles (EVs).
China’s weakness became the main factor in the Organization of Petroleum Exporting Countries’ (OPEC) second downward revision of its 2024 and 2025 global oil demand forecast.
The group now expects world oil demand to advance 2.03 million barrels per day (bpd) instead of its previous estimate of a 2.11 million bpd rise in August.
The International Energy Agency’s (IEA) monthly report, set to be published later in the day, is expected to present additional cues on demand.
US Logs Fewer Build; Product Stockpiles Fuel Demand Concerns
Curbing oil prices’ gains on Thursday was data from the Energy Information Administration (EIA) showing that gasoline and distillate stocks increased above forecasts in the week ending September 6.
US gasoline and distillate build for last week stood at 2.3 million barrels to 221.6 million barrels and 125 million barrels, respectively. That was compared to the 400,000-barrel draw projected for gasoline and the 300,000-barrel surge expected for distillates.
Crude supplies in the country added 833,000 barrels last week, missing the forecast of 900,000 barrels. Still, more product inventories signaled softer demand for US fuel as the travel-packed summer season ends.
The latest inventory report also furthered the possibility of weaker fuel consumption in the coming months due to the decline of the world’s largest economy. Concerns over a potential US recession have significantly dragged down crude prices in the past week.
Official data showed on Wednesday that core consumer prices in the country were up 0.3% in August versus the forecast of 0.2% growth. The reading fueled expectations of a smaller interest rate cut from the Federal Reserve later this month, driving the US dollar higher, which hindered oil prices’ advance.
