Oil prices drop over 2% as Hurricane Rafael fears ease and China stimulus disappoints
Oil prices settled more than 2% lower on Friday as concerns over supply disruptions from Hurricane Rafael in the U.S. Gulf of Mexico lessened, and China’s latest economic-stimulus measures failed to impress some oil traders.
U.S. West Texas Intermediate futures closed at $70.38 per barrel, down 2.7%, while global benchmark futures fell 2.3% to $73.87 per barrel.
Energy producers had shut down over 23% of oil output in the Gulf of Mexico as a precaution against Hurricane Rafael. However, updated forecasts suggested reduced risks to oil production.
Analyst Alex Hodes noted that the threat of supply outages from the hurricane was diminishing as the storm moved towards the center of the Gulf of Mexico.
Meanwhile, China’s new fiscal support package, aimed at easing debt-repayment pressures for local governments, did not directly boost demand as expected by oil investors.
Despite the day’s losses, oil prices had gained over 1% for the week, supported by expectations of stricter sanctions on Iran and Venezuela by U.S. President-elect Donald Trump, potentially reducing oil supply globally.
The U.S. Federal Reserve’s decision to cut interest rates by a quarter percentage point also contributed to a more than 1% increase in oil prices in the previous session.
In conclusion, the easing of Hurricane Rafael fears and the disappointment in China’s stimulus measures led to a drop in oil prices. However, the overall outlook remains positive due to potential supply cuts and supportive factors in the market.