Oil prices rose more than 1% on Wednesday, recouping some of the previous day’s losses. Worries about Hurricane Francine disrupting production in the U.S., the world’s largest producer, outweighed concerns about weak global demand.
Brent crude futures rose 84 cents, or 1.2%, to $70.03 a barrel by 0704 GMT, while WTI crude futures rose 81 cents, or 1.2%, to $66.56 a barrel.
Both indexes fell nearly $3 on Tuesday, with Brent hitting its lowest since December 2021. OPEC revised its demand forecast for this year and 2025, while WTI fell to its lowest level since May 2023.
The market has recovered since Tuesday’s decline was significant, and fears of supply disruptions from Francine also provided support.
Downward pressure is likely to continue in the near term as concerns over slowing demand due to economic slowdowns in China and the United States are mounting. This week, the range for the rest of the year for WTI was lowered from $65-85 to $60-80.
The U.S. National Hurricane Center said on Tuesday that Francine had become a hurricane in the Gulf of Mexico, causing Louisiana residents to flee inland and oil and gas companies to shut down production.
The U.S. Bureau of Safety and Environmental Enforcement (BSEE) said on Tuesday that about 24% of U.S. Gulf crude oil production and 26% of natural gas production remain shut due to the storm.
On Tuesday, the Organization of the Petroleum Exporting Countries (OPEC) cut world oil demand to 2.03 million barrels per day (bpd) in 2024 in a monthly report. OPEC also lowered its 2025 global demand growth forecast to 1.74 million bpd from 1.78 million bpd.
But the U.S. Energy Information Administration (EIA) said on Tuesday that global oil demand will hit a bigger record this year, while production growth will be smaller than previously forecast.
Oil prices were also supported by a pullback in U.S. crude oil inventories.
The API shows weekly U.S. crude oil and gasoline inventories fell by 2.793 million bpd in the week ended Sept. 6, market sources said, citing American Petroleum Institute figures on Tuesday, while gasoline inventories fell by 513,000 bpd.
Analysts estimated that crude oil inventories rose by an average of 1 million bpd and gasoline inventories fell by 0.1 million bpd.
On Tuesday, customs data showed that China’s daily crude oil imports rose to a one-year high last month, but that was still 7% less than a year ago and year-to-date imports were 3% less than the same period a year earlier.
That led the market to predict that the downtrend would remain amid fears of slowing global demand, including from China.
