Investing.com– In Asian trade on Friday, oil prices saw an uptick and are on track for a positive weekly close. Concerns over supply disruptions caused by Hurricane Francine have helped crude rebound from near three-year lows.
However, crude prices are still recovering from steep losses last week and are trading only slightly above this week’s lows. Persistent worries about slowing demand are hindering crude’s progress.
WTI crude expiring in November rose 0.6% to $72.43 a barrel, while Brent crude rose 0.7% to $68.60 a barrel by 21:23 ET (01:23 GMT). Both contracts have seen gains of 1% and 2.4% this week, respectively.
Hurricane Francine Disrupts Gulf of Mexico Production
Hurricane Francine battered oil production and refinery activities in the Gulf of Mexico as it hit Louisiana earlier this week. Although downgraded to a tropical storm later on, the storm led to the evacuation of offshore platforms and suspension of operations in crude and shipping terminals.
The Gulf of Mexico contributes nearly a quarter of all U.S. oil production, and extended production halts could result in tighter supplies in the country.
Oil Markets Grapple with Demand Concerns
Despite some positive momentum this week, oil prices remain close to three-year lows due to ongoing worries about slowing demand.
Weak economic signals from China have been a significant factor in these concerns, as traders brace for potentially weaker demand from the world’s largest oil importer.
Both the Organization of Petroleum Exporting Countries and the International Energy Agency have revised their oil demand forecasts for 2024 downwards in separate reports, citing China-related concerns. However, they also mentioned potential demand growth from other Asian countries, particularly India.
In the U.S., data revealing a significant build in gasoline and distillate inventories has raised concerns about slowing fuel demand as the summer travel season winds down.
Analysis:
The recent rise in oil prices due to Hurricane Francine supply disruptions might provide short-term relief for the oil market, but persistent concerns over slowing demand, especially from China, continue to weigh on prices. Investors should closely monitor developments in the Gulf of Mexico and economic indicators from major oil-consuming countries to gauge the future direction of oil prices. Additionally, factors such as geopolitical tensions and global economic growth forecasts could further impact oil markets in the coming weeks.