Oil Prices Continue Rally, Capping a Volatile Week
OIL & GAS

Oil Prices Continue Rally, Capping a Volatile Week

Oil prices continued their rally, which was initiated by output disruptions in the U.S. Gulf of Mexico. These disruptions were caused by Hurricane Francine, which led to the evacuation of production platforms before the hurricane reached the Louisiana coast.

Brent crude futures increased by 34 cents, or 0.5 per cent, reaching $72.31 per barrel as of 0016 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures rose by 38 cents, or 0.6 per cent, to $69.35 per barrel.

If these gains are sustained, both benchmarks are expected to break a streak of weekly declines, despite a challenging start that saw Brent crude dip below $70 per barrel for the first time since late 2021. At the current levels, Brent crude is projected to see a weekly increase of approximately 1.7 per cent, while WTI is anticipated to gain over 2 per cent.

Oil producers were assessing damage and conducting safety checks on Thursday in preparation for resuming operations in the U.S. Gulf of Mexico. Estimates of supply loss due to Francine were emerging. UBS analysts forecasted a decline in regional output in September by 50,000 barrels per day (bpd) compared to the previous month, while FGE analysts predicted a 60,000 bpd decrease to 1.69 million bpd.

Official data indicated that nearly 42 per cent of the region's oil output was shut in as of Thursday.

This supply shock contributed to a recovery in oil prices from a sharp selloff earlier in the week, which had seen benchmarks fall to multi-year lows due to demand concerns.

Both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) revised their demand growth forecasts downward this week, attributing the revision to economic challenges in China, the world’s largest oil importer. The shift towards lower-carbon fuels was also noted as a factor affecting China's oil demand, according to speakers at the APPEC conference. Customs data released showed that China's crude oil imports averaged 3.1 per cent lower from January to August this year compared to the same period last year.

Oil prices continued their rally, which was initiated by output disruptions in the U.S. Gulf of Mexico. These disruptions were caused by Hurricane Francine, which led to the evacuation of production platforms before the hurricane reached the Louisiana coast. Brent crude futures increased by 34 cents, or 0.5 per cent, reaching $72.31 per barrel as of 0016 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures rose by 38 cents, or 0.6 per cent, to $69.35 per barrel. If these gains are sustained, both benchmarks are expected to break a streak of weekly declines, despite a challenging start that saw Brent crude dip below $70 per barrel for the first time since late 2021. At the current levels, Brent crude is projected to see a weekly increase of approximately 1.7 per cent, while WTI is anticipated to gain over 2 per cent. Oil producers were assessing damage and conducting safety checks on Thursday in preparation for resuming operations in the U.S. Gulf of Mexico. Estimates of supply loss due to Francine were emerging. UBS analysts forecasted a decline in regional output in September by 50,000 barrels per day (bpd) compared to the previous month, while FGE analysts predicted a 60,000 bpd decrease to 1.69 million bpd. Official data indicated that nearly 42 per cent of the region's oil output was shut in as of Thursday. This supply shock contributed to a recovery in oil prices from a sharp selloff earlier in the week, which had seen benchmarks fall to multi-year lows due to demand concerns. Both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) revised their demand growth forecasts downward this week, attributing the revision to economic challenges in China, the world’s largest oil importer. The shift towards lower-carbon fuels was also noted as a factor affecting China's oil demand, according to speakers at the APPEC conference. Customs data released showed that China's crude oil imports averaged 3.1 per cent lower from January to August this year compared to the same period last year.

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