Oil prices saw modest gains on Tuesday as supply disruptions in the US Gulf of Mexico due to Hurricane Francine were offset by concerns over slowing demand, particularly from China, the world’s largest oil importer.
Brent crude futures for November delivery rose by 26 cents, or 0.4%, to trade at $73.01 a barrel as of 12:05 pm AEST (2:05 am GMT). Meanwhile, US crude futures for October delivery climbed 44 cents, or 0.6%, to reach $70.53 a barrel.
Both contracts closed higher in the previous session, bolstered by the ongoing impact of Hurricane Francine on output in the US Gulf of Mexico. However, oil producers in the region have been working to bring production back online as Francine weakened after making landfall.
The market is also closely watching the US Federal Reserve's interest rate decision this week. A cut in interest rates is anticipated to boost economic growth by reducing borrowing costs, which could in turn increase oil demand.
However, persistent concerns about slowing demand, especially in China, have limited crude's upward movement. A string of weak economic data from China over the weekend raised further concerns about the country's economic slowdown, with the threat of deflation and renewed trade tensions with the West adding to the gloomy outlook.
Last week, oil prices tumbled to near three-year lows due to concerns over China’s demand. Both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) downgraded their forecasts for global oil demand, underscoring the challenges ahead for the market.
