The price of oil rose by another 1.5% after jumping by more than 2% yesterday. The catalysts for the price recovery were Hurricane Francine, which hit crude supply in the Gulf of Mexico, as well as increased investor appetite for risky assets. However, concerns about weakening U.S. and Chinese demand continue to put pressure on the oil market.
The US Bureau of Safety and Environmental Enforcement said Hurricane Francine had forced the shut-in of about 670,000 barrels a day in the Gulf of Mexico. That’s equivalent to more than a third of the region’s oil production.
The Energy Information Administration (EIA) said yesterday that U.S. oil inventories rose last week as crude oil imports increased and exports declined. The data also showed that gasoline demand in the United States, the world's largest oil consumer, fell to its lowest level since May. Distillate fuel demand and refinery runs also declined.
Meanwhile, the International Energy Agency (IEA) said today that global oil demand growth is slowing sharply as China's economy cools. The IEA warned that it predicts an oversupply in the oil market next year, even if OPEC+ extends the supply cuts. IEA cuts 2024 world oil demand growth forecast to 900,000 bpd (previous forecast 970,000 bpd), but leaves 2025 world oil demand growth forecast unchanged at 950,000 bpd.