By Georgina McCartney
Oil prices remained stable in early trading on Tuesday as investors assessed the impact of supply disruptions caused by Tropical Storm Francine and the ongoing challenges posed by sluggish Chinese demand.
Crude oil futures saw a modest increase, with Brent crude rising by 0.22% to $72.00 a barrel and WTI crude edging up by 0.17% to $68.83 a barrel.
Following a 1% gain in Monday’s trading session, concerns grew as the U.S. Coast Guard ordered the closure of operations at several Texas ports, including Brownsville, due to the storm’s approach. While the port of Corpus Christi remained operational with restrictions, major oil companies such as Exxon Mobil, Shell, and Chevron took precautionary measures to safeguard their offshore production platforms.
According to ANZ analysts, up to 125,000 barrels per day of oil capacity could be disrupted as a result of the storm’s impact.
Meanwhile, industry experts at the Asia Pacific Petroleum Conference (APPEC) highlighted the challenges facing the oil market, with global traders Gunvor and Trafigura predicting a price range of $60 to $70 per barrel. The outlook is influenced by weakening Chinese demand and the persistent oversupply in the global market.
China’s transition towards cleaner energy sources and its slowing economy have contributed to a significant decline in oil demand growth, with annual growth rates dropping from 500,000-600,000 bpd before the pandemic to 200,000 bpd currently, as noted by Goldman Sachs’ Daan Struyven.
Refining margins in Asia have also dipped to their lowest levels since 2020, reflecting the broader challenges facing the oil industry.
Overall, the combination of supply disruptions from Tropical Storm Francine and the ongoing weakness in Chinese demand underscores the delicate balance in the oil market. Investors and consumers alike should monitor these developments closely, as they could have significant implications for global oil prices and energy markets.
