Oil prices edged higher in Asian trading on Friday, set for a positive close to the week as supply disruptions caused by Hurricane Francine lifted crude from near three-year lows. However, concerns over weakening global demand continue to limit gains.
Brent crude futures, expiring in November, rose 0.6% to $72 per barrel, while West Texas Intermediate (WTI) crude gained 0.4% to $69.3 a barrel. Both benchmarks have seen weekly gains of 1% and 2.4%, respectively, but remain near this week's lows after steep losses the previous week.
Hurricane Francine's impact on oil production in the Gulf of Mexico helped drive the recovery. The storm, which made landfall in Louisiana before being downgraded to a tropical storm, disrupted offshore platforms and natural gas shipping terminals. Several platforms were evacuated, and refinery activities were suspended. The Gulf accounts for nearly 25% of U.S. oil production, and extended production halts could tighten domestic supply.
Despite the supply concerns, oil prices remain pressured by weak demand forecasts. Economic signals from China, the world's largest oil importer, have raised doubts about future consumption, contributing to fears of a global slowdown in oil demand.
Both the Organization of Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) reduced their global oil demand forecasts for 2024, citing China’s sluggish economy. However, they noted that other Asian countries, especially India, could offset some of this decline with strong economic growth.
In the U.S., a large increase in gasoline and distillate inventories added to concerns that fuel demand is slowing as the peak travel season ends. This has further tempered crude’s rebound this week, keeping prices near multi-year lows.
