Tropical Storm Francine Hikes Crude Prices Amid Supply Disruptions

Petroleum Price

• Crude prices rebounded on Wednesday as concerns about Tropical Storm Francine disrupting oil supply outweighed worries about demand.
• Brent crude futures rose 39 cents, or 0.6%, to $69.58 a barrel by 0031 GMT, while U.S. crude futures were up 44 cents, or 0.7%, to $66.19 a barrel. MCX crude oil prices opened at 5611, with a 1.41% rise.

Petroleum Demand and Supply

• Tropical Storm Francine was projected to become a hurricane overnight, the U.S. National Hurricane Center said, prompting Louisiana residents to evacuate and oil and gas companies to shut down Gulf of Mexico production.
• About 24% of crude production and 26% of natural gas output in the U.S. Gulf of Mexico were offline due to the storm, according to the U.S. Bureau of Safety and Environmental Enforcement.
• The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report that world oil demand would rise by 2.03 million barrels per day (bpd) in 2024, down from last month’s forecast of 2.11 million bpd.
• OPEC also revised its 2025 global demand growth estimate to 1.74 million bpd from 1.78 million bpd.
• However, the U.S. Energy Information Administration stated on Tuesday that global oil demand is expected to hit a record this year, while output growth will be lower than previously forecast.
• Meanwhile, China’s daily crude oil imports rose last month to their highest in a year, according to customs data and Reuters records, driven by lower crude oil prices and improved refining margins.

Petroleum News

• Global oil prices fell amid heightened geopolitical tension in the Middle East. Additionally, discouraging economic data from China and the U.S. further raised concerns about oil demand in the world’s top two consumers, fueling fears of a potential surplus in the coming months.
• The rise in supply output from non-OPEC countries may have further aggravated this trend.
• This dip in crude oil prices also impacted Nigeria’s Naira, as the country’s primary source of external reserves is crude oil sales. Brent crude prices dropped to USD 69.48 a barrel, though they later gained slightly, rising by USD 0.29 or 0.42%.

Expert Opinion

After Tuesday's sharp decline, the market bounced back, but downward pressure is likely to continue in the near term. Investors remain concerned about slowing demand due to economic slowdowns in China.