Concern about Hurricane Francine disrupting output in the US outweighs worry about weak global demand
11 September 2024 - 08:18
byYuka Obayashi
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Tokyo — Oil prices climbed on Wednesday, paring some of the previous day’s losses, as concern about Hurricane Francine disrupting output in the US, the world’s biggest producer, outweighed worry about weak global demand.
Brent crude futures climbed 34 cents, or 0.5%, to $69.53 a barrel by 4.30am GMT while US crude futures were at $66.10 a barrel, up 35c, or 0.5%.
Both benchmarks fell nearly $3 on Tuesday, with Brent hitting its lowest since December 2021 and West Texas Intermediate (WTI) falling to a May 2023 trough, after Opec+ revised down its demand forecast for this year and 2025.
“The market rebounded autonomously as Tuesday’s drop was substantial,” said Yuki Takashima, economist at Nomura Securities, adding supply disruption fears from Francine also lent support.
“Still, downward pressure will likely continue in the near term as investors are worried about a slowdown in demand due to economic slowdown in China and the US,” he said, adding he had lowered his forecast range for WTI for the rest of the year to $60-$80 from $65-$85 this week.
Francine strengthened into a hurricane in the Gulf of Mexico, the US National Hurricane Center said on Tuesday, prompting Louisiana residents to flee inland and oil and gas companies to shut production.
About 24% of crude production and 26% of natural gas output in the US Gulf of Mexico were offline due to the storm, the US Bureau of Safety and Environmental Enforcement (BSEE) said on Tuesday.
On Tuesday, oil cartel Opec cut its forecast for world oil demand to rise by 2.03-million barrels a day in 2024, from August's forecast for growth of 2.11-million barrels a day, it said in a monthly report.
Opec also cut its 2025 global demand growth estimate to 1.74-million from 1.78-million barrels a day.
But the US Energy Information Administration (EIA) said on Tuesday global oil demand was set to grow to a bigger record this year while output growth will be smaller than previous forecasts.
Oil prices were also supported by a withdrawal in US crude inventories.
US crude oil stocks fell by 2.793-million barrels in the week ended September 6 while petrol inventories declined by 513,000 barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
Eleven analysts polled by Reuters estimated on average that crude inventories rose by about 1-million barrels and petrol stocks fell by 0.1-million barrels..
China’s daily crude oil imports rose in August to their highest in a year, customs data and Reuters records showed on Tuesday, but that was still 7% less than a year ago and year-to-date imports are 3% less than the year before period.
That has led Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, to predict the market will remain bearish due to fears about slowing global demand, including China’s.
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Disruption worries drive oil’s recovery
Concern about Hurricane Francine disrupting output in the US outweighs worry about weak global demand
Tokyo — Oil prices climbed on Wednesday, paring some of the previous day’s losses, as concern about Hurricane Francine disrupting output in the US, the world’s biggest producer, outweighed worry about weak global demand.
Brent crude futures climbed 34 cents, or 0.5%, to $69.53 a barrel by 4.30am GMT while US crude futures were at $66.10 a barrel, up 35c, or 0.5%.
Both benchmarks fell nearly $3 on Tuesday, with Brent hitting its lowest since December 2021 and West Texas Intermediate (WTI) falling to a May 2023 trough, after Opec+ revised down its demand forecast for this year and 2025.
“The market rebounded autonomously as Tuesday’s drop was substantial,” said Yuki Takashima, economist at Nomura Securities, adding supply disruption fears from Francine also lent support.
“Still, downward pressure will likely continue in the near term as investors are worried about a slowdown in demand due to economic slowdown in China and the US,” he said, adding he had lowered his forecast range for WTI for the rest of the year to $60-$80 from $65-$85 this week.
Francine strengthened into a hurricane in the Gulf of Mexico, the US National Hurricane Center said on Tuesday, prompting Louisiana residents to flee inland and oil and gas companies to shut production.
About 24% of crude production and 26% of natural gas output in the US Gulf of Mexico were offline due to the storm, the US Bureau of Safety and Environmental Enforcement (BSEE) said on Tuesday.
On Tuesday, oil cartel Opec cut its forecast for world oil demand to rise by 2.03-million barrels a day in 2024, from August's forecast for growth of 2.11-million barrels a day, it said in a monthly report.
Opec also cut its 2025 global demand growth estimate to 1.74-million from 1.78-million barrels a day.
But the US Energy Information Administration (EIA) said on Tuesday global oil demand was set to grow to a bigger record this year while output growth will be smaller than previous forecasts.
Oil prices were also supported by a withdrawal in US crude inventories.
US crude oil stocks fell by 2.793-million barrels in the week ended September 6 while petrol inventories declined by 513,000 barrels, according to market sources citing American Petroleum Institute figures on Tuesday.
Eleven analysts polled by Reuters estimated on average that crude inventories rose by about 1-million barrels and petrol stocks fell by 0.1-million barrels..
China’s daily crude oil imports rose in August to their highest in a year, customs data and Reuters records showed on Tuesday, but that was still 7% less than a year ago and year-to-date imports are 3% less than the year before period.
That has led Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, to predict the market will remain bearish due to fears about slowing global demand, including China’s.
Reuters
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