By Scott DiSavino
NEW YORK (Reuters) -Oil prices rose about 1% on Monday on concerns that a hurricane set to hit Louisiana on Wednesday will disrupt production and refining along the U.S. Gulf Coast.
() futures rose 78 cents, or 1.1%, to settle at $71.84 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $1.04, or 1.5%, to settle settle at $68.71.
On Friday, Brent and US diesel futures closed at their lowest price since December 2021. WTI closed at their lowest price since June 2023 and US gasoline futures closed at their lowest level since February 2021.
In the US, oil and gas producers along the Gulf Coast began evacuating workers and restricting drilling in preparation for Tropical Storm Francine as it raged across the Gulf of Mexico.
The U.S. National Hurricane Center forecast that Francine will strengthen into a hurricane on Tuesday before hitting the Louisiana coast. According to the U.S. Energy Information Administration (EIA), the Gulf Coast accounts for about 50% of the nation’s refining capacity.
“There is a small recovery in prices underway… inspired by hurricane warnings that could threaten the US Gulf Coast, but the broader conversation remains about where demand will come from and what OPEC+ can do,” said John Evans, analyst at PVM . .
OPEC+ includes the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia.
In Libya, OPEC member National Oil Corp declared force majeure on several crude oil cargoes loaded from the port of Es Sider, curtailing oil production amid a political standoff over the central bank and oil revenues.
Oil producers group OPEC+ has agreed to delay a planned production increase of 180,000 barrels per day for October by two months in response to falling crude prices.
Analysts said investor optimism about a soft landing for the U.S. economy, in which inflation is contained without a recession or a sharp rise in unemployment, also helped support crude prices. The US government will release a crucial inflation report later this week.
“A recession in the US is not inevitable, but the Federal Reserve must start cutting rates quickly and aggressively to avoid a recession,” said James Knightley, chief global economist at ING.
US central bank policymakers signaled at the Fed’s September 17-18 policy meeting that they are ready to implement a series of interest rate cuts. In doing so, they have pointed to a cooling in the labor market that could accelerate into something more serious if lower lending did not materialize. costs.
Lower rates can stimulate economic growth and demand for oil. The Fed aggressively raised rates in 2022 and 2023 to curb the rise in inflation.
BEARISH FORECASTS
But not everyone is optimistic about crude oil prices.
Morgan Stanley cut its fourth-quarter Brent price forecast to $75 a barrel from $80, noting that prices were likely to remain around that level unless demand weakens further.
Global commodity traders Gunvor and Trafigura said they expect oil to trade between $60 and $70 a barrel due to sluggish demand from China and persistent global oversupply.
China’s shift to low-carbon fuels and a sluggish economy are dampening oil demand growth in the world’s biggest crude importer, speakers at the APPEC energy conference said.
Refining margins in Asia have fallen to their lowest seasonal levels since 2020.
