By Adedapo Adesanya
On Thursday, Brent crude futures rose by $1.70 or 2.4 per cent to $72.31 per barrel and the US West Texas Intermediate (WTI) jumped by $1.91 or 2.8 per cent to $69.22 per barrel as producers assessed the damage to output in the Gulf of Mexico after Hurricane Francine tore through offshore oil-producing areas in the United States.
Analysts estimated that as much as 1.5 million barrels of Gulf of Mexico’s output was disrupted by the storm as companies evacuated more than 171 offshore platforms due to Francine.
The disruptions are estimated to have reduced output this month from the Gulf of Mexico by around 50,000 barrels per day.
Reuters reported that some analysts cautioned that Francine’s impact could be short-lived, as it lost intensity quickly after making landfall in Louisiana on Wednesday evening. This could sway the oil market’s attention back to a lack of global demand.
Also, since it made landfall as a Category 2 storm, there is a chance that the impact won’t last that long, even though the Governor of Louisiana declared a state of emergency.
On Thursday, the International Energy Agency lowered its 2024 demand growth forecasts by more than 7 percent to 900,000 barrels per day, citing weak demand in China and feeble growth in other regions.
This is after the Organisation of the Petroleum Exporting Countries and its allies, the OPEC+ producer group on Tuesday slashed its annual demand growth forecasts for the second month in a row.
Global oil demand growth in the first half of 2024 was only 800,000 barrels per day year-on-year, the lowest pace of growth since 2020, the IEA said in its closely-watched Oil Market Report.
The Paris-based agency said the main driver of the sluggish growth has been “a rapidly slowing China,” where oil consumption contracted on an annual basis for a fourth straight month in July, by 280,000 barrels per day.
Concerns about weak global oil demand, particularly from top importer China, have weighed heavily on prices in recent months.
The IEA now sees annual growth in global demand at 900,000 barrels per day this year, compared to 2.1 million barrels per day growth in 2023. The rise in demand for 2025 is seen at an equally subdued level of about 950,000 barrels per day.
The US, the world’s top oil consumer is also indicating weak demand as oil stockpiles rose in the country last week as crude imports grew, exports dipped, and fuel demand slumped, data from the Energy Information Administration (EIA) showed on Wednesday.
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