By Yuka Obayashi
Wondering what's causing the recent surge in crude prices? Look no further than Tropical Storm Francine, which is currently threatening to disrupt oil supply. Despite concerns about global demand, the impact of the storm on production facilities has investors on edge.
Crude futures saw a significant increase, with Brent climbing 0.6% to $69.58 a barrel and WTI up 0.7% to $66.19 a barrel. This rebound comes after both benchmarks experienced a sharp drop on Tuesday following a revised demand forecast from OPEC+.
Hiroyuki Kikukawa, president of NS Trading, pointed out that the storm's potential to disrupt supply has driven the market's reaction. With production facilities already suspended and the storm on track to become a hurricane, concerns are mounting.
As Tropical Storm Francine forces oil and gas companies to shut down Gulf of Mexico production, the U.S. Bureau of Safety and Environmental Enforcement reported that a significant portion of crude production and output in the region is already offline.
While OPEC revised down its demand forecast for 2024 and 2025, the U.S. Energy Information Administration provided a contrasting view, predicting record global oil demand this year. Additionally, China's increased daily crude oil imports signal a positive trend in the market.
Expert Analysis:
Despite the current surge in crude prices driven by supply disruption fears, the market remains uncertain due to concerns about slowing global demand. Investors should closely monitor the impact of Tropical Storm Francine on production facilities and keep an eye on OPEC's upcoming decisions.