Oil prices steady as supply disruptions caused by Tropical Storm Francine offset concerns over weak demand, particularly from China. Brent crude futures rose 0.22% to $72.00 a barrel, while U.S. West Texas Intermediate crude futures saw a 0.17% increase to $68.83 a barrel. These gains come after a 1% rise in both benchmarks during Monday’s trading session.
The U.S. Coast Guard ordered the closure of several Texas ports, including Brownsville, as Tropical Storm Francine crossed the Gulf of Mexico. Exxon Mobil, Shell, and Chevron responded by shutting in production at various offshore platforms, with up to 125,000 barrels per day of oil capacity at risk of disruption. The storm is expected to strengthen into a hurricane soon, adding to the challenges that keep oil prices steady despite demand fluctuations.
Global traders like Gunvor and Trafigura predict that oil prices could fluctuate between $60 and $70 per barrel, citing ongoing oversupply and weak Chinese demand. China’s slower economic growth and shift towards cleaner energy have significantly reduced its demand for oil, contributing to market uncertainty. According to Goldman Sachs, China’s annual oil demand growth has dropped to around 200,000 barrels per day, down from 500,000-600,000 barrels per day before the pandemic.
With both supply disruptions and weakened demand, oil prices remain steady but face volatility as market forces continue to fluctuate. The storm and other economic factors are likely to impact oil markets further in the coming days, making the outlook for oil prices uncertain.
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