Oil prices rose as the hurricane approached the Gulf of Mexico, which also helped markets recover from a significant drop on Friday, September 6.
Points of attention
- The approach of the hurricane to the Gulf of Mexico triggered the rise in oil prices and helped market recovery post a significant drop.
- The possible impact of the hurricane on the US coast, where a large portion of oil refineries are situated, contributed to the price hike.
- Decrease in the US unemployment rate may lead to Federal Reserve interest rate cuts, potentially increasing the demand for oil.
- Weak demand due to economic slowdown, particularly from China, is impacting oil prices negatively.
- Middle East tensions and OPEC+ countries' decision to delay oil production cuts are also influencing the rise in oil prices on global markets.
What is known about the rise in oil prices due to the hurricane in the Gulf of Mexico
West Texas Intermediate crude futures rose 72 cents, or 1.06%, to $68.39 a barrel by 0635 GMT, according to reporters.
Brent crude futures rose 71 cents, or 1%, to $71.77 a barrel.
At the start of trading on Asian exchanges, prices rose by $1, but then rolled back.
Analysts said the renewed decline was in part a response to a possible hurricane on the US Gulf Coast, home to about 60% of US oil refining capacity.
At the close on Friday, Brent fell 10% for the week to its lowest level since December 2021, while WTI fell 8% to its lowest level since June 2023 amid weak U.S. jobs data.
The long-awaited US report showed that non-farm payrolls rose by a smaller-than-expected 142,000 in August, while July's figure was revised downward to 89,000, the smallest increase since December's absolute decline. of 2020.
The fall in the unemployment rate suggests that the Federal Reserve may cut interest rates by 25 basis points this month, rather than by half a point as analysts had predicted.
Lower interest rates usually increase demand for oil, stimulating economic growth and making it cheaper for holders of non-dollar currencies. However, weak demand continues to hold back price growth.
The chief energy strategist of the American investment giant Carlyle Group, Jeff Curry, on Monday at the APPEC energy conference in Singapore noted the weak demand from China due to the slowdown in economic growth and the reduction of oil reserves.
Refinery margins in Asia fell to their lowest seasonal level since 2020 on weak demand from the two largest economies.
U.S. Gulf Coast fuel oil exports fell to their lowest level since January 2019 last month amid shrinking refining margins.
What is known about other factors influencing the growth of oil prices
The rise in oil prices on world markets is influenced by the aggravation of the situation in the Middle East.
The price of November Brent futures on the London ICE Futures exchange is $71.93 per barrel as of 8:05 a.m. Kyiv time, which is $0.87 (1.22%) higher than at the close of previous trading.
On Friday, these contracts fell $1.63 (2.2%) to $71.06 a barrel, renewing the low since December 3, 2021.
WTI oil futures for October on electronic trading of the New York Mercantile Exchange (NYMEX) increased in price by $0.9 (1.33%), to $68.57 per barrel.
According to the results of previous trades, quotations of these futures fell by $1.48 (2.1%) to $67.67 per barrel, which is the minimum since June 12 last year.
Over the past week, the international benchmark lost 7.6%, the North American one lost 8%.
In addition, last week the eight OPEC+ countries, which are voluntarily cutting oil production by 2.2 million barrels per day (bpd) and had planned to gradually roll back the cuts starting in October, delayed the decision by two months.
