Oil prices fell slightly on September 10 as weak demand in China offset supply disruptions caused by Tropical Storm Francine. Risks of a global glut of fuel continued to weigh on the market, Reuters reports.
Storm in the US has had little impact on prices
Brent futures fell 4 cents, or 0.06%, to $72.80 a barrel by 03:34 GMT (06:34 Moscow time). West Texas Intermediate crude fell 10 cents, or 0.15%, to $68.60. Both benchmarks gained about 1% in Monday's trading. As of 08:10 Moscow time, quotes continued to decline. Thus, Brent fell to $71.60-$71.70. In the case of WTI, quotes remained around $68.60.
On the evening of September 9, the U.S. Coast Guard ordered the closure of all operations at the Port of Brownsville and other smaller Texas ports as Tropical Storm Francine made landfall in the Gulf of Mexico. The Port of Corpus Christi remained open, but with restrictions.
The storm is forecast to strengthen significantly in the coming days and was expected to become a hurricane Monday night or Tuesday morning, according to the National Hurricane Center (NHC).
Exxon Mobil said it was suspending production at its offshore Hoover platform, while Shell suspended drilling operations at two platforms. Chevron also began shutting in oil and gas production at two of its offshore platforms.
Analysts at ANZ said “at least 125,000 bpd of production is at risk of disruption”. However, signs of weakening global demand and expectations of a continued global oil glut have weighed on the market.
Demand continues to put pressure on oil prices
Data from China on Monday showed that consumer inflation in the country accelerated in August to its highest level in six months. However, domestic demand remained weak and producer price deflation worsened. Analysts at ANZ said:
“Signs of weakness in the US and China have led to bearish sentiment among investors, with asset managers now the least bullish on oil in more than 13 years.”
Gunvor and Trafigura expect oil prices to fluctuate in the range of $60-70 per barrel amid weakening Chinese demand and a persistent global glut. This was reported on September 10 at the Asia Pacific Petroleum Conference (APPEC), as reported on pronedra.ru. China's transition to low-carbon fuels and a slow economy are depressing demand growth, participants in the event noted.
China's annual demand growth has slowed from 500,000-600,000 bpd in the five years before the COVID-19 pandemic to 200,000 bpd now, said Daan Streijven, head of oil research at Goldman Sachs.
Markets will be watching OPEC's monthly oil market report on Tuesday, while the U.S. Energy Information Administration will also release its short-term forecasts for the global market and domestic oil production.
