Oil Prices Steady Amid Hurricane Concerns and Economic Indicators

Oil prices steadied on Monday as traders assessed the potential impact of a hurricane in the Gulf Coast and last week’s nonfarm payrolls report.

By 10:14 ET (14:14 GMT), the Brent contract had increased by 0.3% to $71.28 per barrel, while U.S. crude futures (WTI) were up by 0.4% at $68.05 a barrel. Brent had dropped by 10% at Friday’s close to its lowest level since December 2021, and WTI had decreased to its lowest mark since June 2023, according to Reuters.

The US National Hurricane Center indicated that a weather system in the Gulf of Mexico is expected to develop into a hurricane before reaching the northwestern Gulf Coast, an essential area for American refining capacity.

Analysts noted that recent supply disruptions in Libya, a major oil producer, are also influencing prices, as reported by Reuters.

Additionally, the potential for upcoming Federal Reserve interest rate cuts following a softer-than-expected August employment report has supported crude prices, though uncertainties about the extent and timeline of these reductions persist. Lower borrowing costs could enhance economic activity and increase oil demand.

Executives from global commodity traders Gunvor and Trafigura mentioned at the Asia Pacific Petroleum Conference in Singapore that oil prices could range between $60 to $70, partly due to weak demand in China, the top oil importer.

ING analysts highlighted that concerns about China would likely lead to discussions at the conference regarding options for the OPEC+ oil group to stabilize the market. Recently, OPEC+ decided to postpone a planned output increase for October by two months in an effort to steady declining oil prices.

While OPEC+ cuts might tighten the market for the rest of this year, they don’t address the surplus expected next year, according to the ING analysts.

Reuters contributed to this report.