Oil prices rose more than 2% on Tuesday as the hurricane in the United States supported supply cuts. However, predicting a slower-than-expected recovery in demand due to the pandemic continues to worry the market.
Brent crude LCOc1 gained 92 cents, or 2.3%, to settle at $40.53 a barrel, while West Texas Intermediate (WTI) crude futures CLc1 rose $1.02, or 2.7%, to settle at $38.28 a barrel.
Both contracts fell on Monday.
Futures rose before Hurricane Sally reached the shores of the US Gulf. Some major export ports have been closed, with over a quarter of US offshore oil and gas production being stopped.
Severe weather events in the US cause some uncertainty about oil production and support the increase in prices.
Sources warn of the pace of economic recovery, lowering the 2020 outlook to 91.7 million barrels to 200,000 barrels per day. With most of the easy gains already achieved, the recovery in oil demand is expected to slow significantly in the second half of 2020.
The world’s commercial oil stocks are said to have reached an all-time high of 3.225 billion barrels in July, and forecasts are unpredicted as the oil stock projected levels for the second half of the year may be changed.
The Organization of Petroleum Exporting Countries said in a report on Monday that world oil demand will decline by 9.46 million barrels this year, more than the 9.06 million barrels expected a month ago. At its meeting Thursday, Opec is expected to focus on compliance and compensation mechanisms for current cuts, rather than recommendations for deeper production cuts.
Meanwhile, as China struggles to melt down its record crude oil imports, crude oil production increased in August from a year earlier, reaching the second-highest level as a record level.
U.S. crude oil stocks fell 9.5 million barrels to about 494.6 million barrels on the week of September 11.
Official data on US oil stocks will be released on Wednesday.