Investing.com-- In the world of investing, oil prices saw a rise in Asian trade on Thursday due to expectations of supply disruptions caused by Hurricane Francine. This helped to offset ongoing worries about slowing global crude demand.
After making landfall in Louisiana, Hurricane Francine passed through the Gulf of Mexico, leading several oil firms to limit or suspend operations in its path. This anticipation of tighter supplies led crude to bounce back from recent three-year lows, although the momentum of this rebound seemed to be fading.
WTI crude oil for November delivery increased by 0.3% to $70.83 a barrel, while Brent crude rose by 0.3% to $66.78 a barrel by 21:02 ET (01:02 GMT).
US inventories grow less than expected, product stockpiles surge
However, the growth of crude was tempered by government data indicating a larger-than-expected rise in crude and product stockpiles for the week ending September 6. While overall crude inventories saw a slightly smaller build than anticipated, the surge in product inventories raised concerns about cooling U.S. fuel demand as the summer season came to a close.
Furthermore, worries about a weakening U.S. economy impacting fuel consumption in the coming months added to downward pressure on oil prices, with fears of a recession in the U.S. weighing heavily on the market.
Additionally, stronger-than-expected economic data released on Wednesday led to speculation of a smaller interest rate cut by the Federal Reserve in September. This speculation bolstered the dollar and consequently put pressure on crude prices.
IEA report awaited after OPEC cuts demand forecast
Another focal point on Thursday was the upcoming monthly report from the International Energy Agency (IEA), which could provide more insights into a potentially weaker demand outlook for oil.
This report follows closely after the Organization of Petroleum Exporting Countries (OPEC) reduced its forecast for oil demand growth in 2024 and 2025, citing weakening trends in China, the top oil importer.
Concerns were further exacerbated by sluggish economic data from China, where overall growth was slower than expected in August. While China's oil imports saw a sharp increase during the month, analysts attributed this rise more to lower oil prices rather than an uptick in demand. Other economic indicators from China also pointed to ongoing pressure on the economy.
Overall, the combination of supply disruptions from Hurricane Francine, concerns about global demand, and economic uncertainties in major markets like the U.S. and China have created a complex landscape for oil prices. Investors and consumers alike should monitor these developments closely to understand how they may impact their finances and daily lives.