Oil futures: Brent above $70/b as Hurricane Francine landfall eyed
Quantum Commodity Intelligence – Crude oil prices rebounded strongly Wednesday as concerns over the impact of Hurricane Francine offset the build in EIA oil inventories.
Front-month Nov24 ICE Brent futures were trading at $70.71/b (1720 GMT), compared to Tuesday's settle of $69.19/b and a daily range of $69.00/b-$71.09/b.
At the same time, Oct24 NYMEX WTI was trading at $67.53/b versus Tuesday's settle of $65.75/b.
Crude futures started the day brightly with Francine upgraded to a hurricane, shutting-in around a quarter of US oil and gas production in the Gulf of Mexico.
Benchmarks were also given a lift with much of Libya's production still shut-in, while state-owned NOC declared further force majeures as wranglings between rival governments over Central Bank control continued.
Markets had slumped to fresh multi-year lows as demand concerns dictated sentiment, while both OPEC and the EIA downgraded forecasts for this year and next.
"Crude oil prices collapsed amid renewed fears of weaker demand. Weak economic data in the US and China in recent weeks has raised concerns that demand will cause an oversupply in the market," said ANZ commodity strategist Daniel Hynes.
Latest data revealed China's appetite for the fuel is waning. Crude oil imports rebounded from July but remained sluggish on a seasonal basis, down 7% year-on-year as poor refining margins continue to keep utilisation rates low.
Meanwhile, OPEC made further downward revisions to its forecast for global oil demand growth in its latest report, marking a second consecutive cut to its outlook.
The producer group lowered its oil demand growth estimate for 2024 by 80,000 bpd to 2.03 million bpd and trimmed its 2025 forecast by 40,000 bpd to 1.74 million bpd.
EIA
Wednesday's EIA stock report came in more bearish than expected, revealing an across-the-barrel build and initially triggering a downwards correction.
US commercial crude inventories were seen 833,000 barrels higher in the week to 6 September, as domestic runs dropped for the first time in six weeks and exports fell by 451,000 bpd.
Gasoline and distillate stocks both jumped by more than 2 million barrels, while US product demand (gasoline, diesel and jet) sank to a five-month low of 13.5 million bpd, confirming the end of the summer travel season.
The American Petroleum Institute earlier pointed to a 2.79 million barrel crude draw, as well as a 500,000-barrel drop in gasoline inventories and a 200,000-barrel build in distillates.
On Tuesday the EIA slashed its global oil demand forecast for both 2024 and 2025 on weaker-than-expected Chinese and European data but remained relatively bullish for oil prices as it expected steep inventory draws through to the end of the year.
The US agency now sees oil demand at 900,000 bpd in 2024, down as much as 200,000 bpd from its August forecast. Next year's demand was pegged at 1.5 million bpd, down 100,000 bpd from the August report.
