Oil prices edged higher on Wednesday, recovering some of the losses from the previous day, as market participants focused on potential supply disruptions caused by Hurricane Francine in the United States. The U.S., being the world’s largest oil producer, faces risks to its production capacity as the hurricane approaches key oil-producing regions. This concern outweighed the ongoing worries about weak global demand, particularly from economic slowdowns in major economies like China and the U.S.
Brent crude futures gained 34 cents, or 0.5%, to reach $69.53 a barrel by 0430 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures climbed 35 cents, or 0.5%, to $66.10 per barrel. Both benchmarks had plummeted by nearly $3 on Tuesday, with Brent hitting its lowest point since December 2021 and WTI reaching a low not seen since May 2023. This drop followed OPEC+’s decision to revise down its global demand forecast for both 2024 and 2025.
“The market rebounded autonomously as Tuesday’s drop was substantial,” said Yuki Takashima, an economist at Nomura Securities. He further noted that fears of supply disruptions due to Hurricane Francine had lent support to the market. However, he added that downward pressure on prices would likely persist in the short term, driven by ongoing concerns about a slowdown in demand, primarily due to economic challenges in China and the United States.
Takashima also adjusted his forecast range for WTI for the remainder of 2024, lowering it from $65-$85 per barrel to $60-$80 per barrel.
While the immediate threat of the hurricane is supporting oil prices, analysts continue to warn of volatility as the global demand outlook remains uncertain.
