Oil & Gas


OIL PRICES POISED FOR WEEKLY GAIN.

Irene Jerry
3 months

Crude oil prices continued their upward trend today, building on Thursday's gains, and are on track to break a three-week losing streak if the momentum holds. However, this increase could be temporary as oil producers in the Gulf of Mexico are restarting operations after Hurricane Francine. The storm had shut down about 42% of production in the region, equivalent to 730,000 barrels per day, which initially helped boost prices.

UBS analysts believe the hurricane impacted even more production, estimating a total disruption of 1.5 million barrels per day. This could reduce the region's monthly output by 50,000 barrels per day. Despite this, oil prices have remained relatively steady, showing unexpected resilience to the International Energy Agency’s (IEA) recent downward revision of oil demand growth by 70,000 barrels per day, due to weakening demand from China.

Typically, an IEA demand forecast cut would cause an immediate market reaction, but the disruptions from Hurricane Francine appear to have balanced the effects. Another possibility is that traders had already anticipated this after OPEC revised its own demand outlook earlier in the week. Some analysts noted that oil prices had fallen to near three-year lows before recovering as markets factored in the short-term supply disruptions caused by the storm.

Additionally, oil prices received further support from expectations that the U.S. Federal Reserve may cut interest rates during its meeting scheduled for September 17 and 18. Analysts pointed out that for the rest of the year, two key factors will influence the oil market: weakening demand from China and OPEC+’s strategies for maintaining market share in this challenging demand environment.


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