Arunima Kumar
(Reuters) – Oil prices rose about 2 percent on Thursday as they continued to rebound on concerns over the impact of Hurricane Francine on U.S. production, but a gloomy demand outlook capped gains.
November futures were up $1.24, or 1.8 percent, at $71.85 a barrel as of 1008 GMT, while October futures were up $1.26, or 1.9 percent, at $68.57.
Both contracts rose more than 2% in the previous trading session after Hurricane Francine made landfall in southern Louisiana on Wednesday, shutting offshore platforms in the U.S. Gulf of Mexico and disrupting operations at coastal refineries.
“Hurricane Francine is estimated to have disrupted U.S. crude oil production by around 1.5 million barrels, reducing Gulf of Mexico production by around 50,000 barrels per day in September,” UBS analysts said.
About 39% of crude oil in the Gulf of Mexico, nearly half of production, was shut down on Wednesday, according to the maritime regulator, and a total of 171 production platforms and three drilling rigs were evacuated.
“The region accounts for about 15 percent of U.S. crude production, so any disruptions to production would likely lead to a short-term supply squeeze,” said Priyanka Sachdeva, senior market analyst at Singapore-based brokerage Philip Nova.
But as the storm subsided after making landfall, attention in the oil market began to shift to declining demand.
The International Energy Agency (IEA) on Thursday lowered its 2024 oil demand growth forecast by 70,000 barrels per day, or about 7.2 percent, to 900,000 barrels per day, citing weak demand from China.
U.S. crude oil inventories generally increased last week as crude imports rose and exports fell, the Energy Information Administration (EIA) said on Wednesday.
Kelvin Wong, senior market analyst at OANDA, said despite concerns around Hurricane Francine, the medium-term trend for WTI crude remains bearish, supported by weak demand from China and “growth fears” in the United States.
Earlier this week, the Organization of the Petroleum Exporting Countries (OPEC) cut its forecast for global oil demand growth this year and also cut its forecast for 2025, marking two consecutive downward revisions.
Both oil price gauges fell sharply on Tuesday following downward revisions.
Meanwhile, investors are waiting for the Federal Reserve's policy meeting on September 17-18 in hopes of a rate cut.
Lower interest rates could stimulate economic growth and increase demand for oil.
Traders are also awaiting U.S. economic data due to be released later on Thursday.
