Oil prices rise on fears of supply disruption from tropical storm By Reuters

By Yuka Obayashi

TOKYO (Reuters) – Oil prices rose on Wednesday as concerns about oil supply disruptions from Tropical Storm Francine outweighed demand concerns.

Futures rose 39 cents, or 0.6%, to $69.58 a barrel at 0031 GMT, while futures stood at $66.19 a barrel, up 44 cents, or 0.7%.

Both benchmarks fell nearly $3 on Tuesday, with Brent hitting its lowest level since December 2021 and WTI falling to a May 2023 low after OPEC+ cut its demand forecast for this year and 2025.

“Investors have adjusted their positions after Tuesday’s sharp drop,” said Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan (OTC:) Securities.

“The recovery was also driven by concerns that the storm could disrupt supplies as some production facilities have already been shut down,” he said, though he predicted the market would remain pessimistic amid fears of weakening global demand.

According to the U.S. National Hurricane Center, Tropical Storm Francine was expected to strengthen into a hurricane on Tuesday night. Louisiana residents fled inland and oil and gas companies shut down production in the Gulf of Mexico.

About 24% of crude oil production and 26% of output in the U.S. Gulf of Mexico were shut in due to the storm, the U.S. Bureau of Safety and Environmental Enforcement (BSEE) reported Tuesday.

The Organization of the Petroleum Exporting Countries (OPEC) said in a monthly report on Tuesday that global oil demand will rise by 2.03 million barrels per day (bpd) in 2024, down from last month’s forecast of 2.11 million bpd.

OPEC also lowered its forecast for global demand growth in 2025 to 1.74 million barrels per day from 1.78 million barrels per day.

But the U.S. Energy Information Administration (EIA) reported Tuesday that global oil demand is expected to hit a record high this year, while production growth will be lower than previously forecast.

Meanwhile, daily imports of crude oil from China rose to a year-high last month, customs data and Reuters reports showed on Tuesday, as supplies recovered cautiously thanks to lower crude prices and improved refining margins.