Oil futures experienced a near 1% increase on Monday, as an approaching hurricane in the U.S. Gulf Coast region helped prices recover after significant losses the previous week. Brent crude rose by 67 cents, reaching $71.73 per barrel, while West Texas Intermediate climbed by 68 cents to $68.35. This came after a six-session streak of losses where Brent crude had dropped over 11%, marking its lowest close since December 2021.
The rise in prices was attributed to a potential hurricane, which the U.S. National Hurricane Center forecasted could develop before making landfall along the northwestern U.S. Gulf Coast. This area accounts for around 60% of the nation’s refining capacity. PVM analyst John Evans noted the slight price recovery but emphasised that broader concerns about oil demand and OPEC+ actions remain unresolved.
Last week, OPEC+ delayed a planned increase in output by 180,000 barrels per day for October, reacting to the falling prices. At a conference in Singapore, executives from trading firms Gunvor and Trafigura projected oil prices would range between $60 and $70 per barrel due to weak demand from China and persistent oversupply issues. Morgan Stanley also reduced its Brent forecast for the fourth quarter to $75 per barrel from $80, noting that prices would likely remain stable unless demand dropped further.
Economic factors in China have weighed heavily on oil demand, driven by a slowdown and inventory reductions, according to Jeff Currie from Carlyle Group. Meanwhile, refining margins in Asia have hit their lowest seasonal levels since 2020. In the U.S., a jobs report on Friday showed lower-than-expected payroll growth in August. Some analysts suggest that a dip in the unemployment rate could slow down potential interest rate cuts by the Federal Reserve, which would, in turn, affect oil demand.
Challenger Energy Group plc (LON:CEG) is a Caribbean and Atlantic margin focused oil and gas company, with a range of petroleum assets located onshore in Trinidad and Tobago, and Suriname, and offshore in the waters of The Bahamas and Uruguay.
