Oil Prices Rise Amid Hurricane Francine Impact and Demand Concerns

Oil prices experienced an uptick during early trading in the U.S. on Thursday, as fears of supply interruptions following Hurricane Francine helped to counter ongoing worries about weakening global crude demand.

Hurricane Francine made landfall in Louisiana on Wednesday after moving through the Gulf of Mexico, where several oil companies had to limit or halt operations in the storm’s path. Amid expectations of tighter supply, crude prices managed to recover from nearly three-year lows reached earlier in the week, although this rebound seemed to be losing momentum.

In terms of pricing, crude futures for November increased by 0.6% to $71.06 a barrel, while other crude futures climbed by 0.8% to $67.84 per barrel by 10:00 ET.

U.S. Inventories Rise Less Than Anticipated, Product Stockpiles Surge

Crude’s advance was tempered by government data indicating a larger-than-expected increase in inventories during the week ending September 6. Although there was a slightly smaller-than-anticipated build in overall crude supplies, the rise in product inventories raised concerns about declining U.S. fuel demand as the busy summer travel season came to a close.

This inventory report also fueled apprehensions that a weakening U.S. economy could lead to diminished fuel consumption in the upcoming months. Fears of a potential recession in the U.S. acted as a significant drag on oil prices throughout the previous week.

Additionally, stronger-than-expected economic data released on Wednesday prompted speculation about a smaller interest rate cut by the Federal Reserve in September, which boosted the dollar and further pressured crude prices.

IEA Lowers Demand Forecast

Attention on Thursday also shifted to a monthly report from the International Energy Agency (IEA), which revised its full-year oil demand growth forecast downward by approximately 7.2% to 900,000 barrels per day, citing lackluster demand from China, the world’s top oil importer.

This report follows a recent cut in the demand growth forecasts for 2024 and 2025 by the Organization of the Petroleum Exporting Countries (OPEC), also attributing the slowdown to concerns regarding China.

Recent economic data from China, particularly showing that overall imports grew at a slower-than-expected rate in August, has exacerbated worries over oil demand this week. Additional indicators suggested that the second-largest economy in the world continued to face challenges throughout the month.