SINGAPORE, Sept 17 (Askume) – Oil prices continued to rise on Tuesday as markets focused on concerns about U.S. output following Hurricane Francine and expectations of a drawdown in U.S. crude stockpiles.
November Brent crude futures were up 34 cents, or 0.5%, at $73.09 a barrel by 0420 GMT. U.S. crude futures for October rose 49 cents, or 0.7%, to $70.58 a barrel.
Both contracts ended higher in the previous session as Hurricane Francine’s ongoing impact on US Gulf output outweighed concerns about Chinese demand ahead of this week’s Federal Reserve rate cut decision, which was positive for oil investor sentiment.
Data from the US Bureau of Safety and Environmental Enforcement (BSEE) on Monday showed that more than 12% of crude oil production and over 16% of natural gas output in the US Gulf of Mexico is shut.
“Oil prices have recovered slightly… the extremely pessimistic conditions of the past few weeks require stability in the near term, and oil prices have fallen to their lowest level since 2021,” said IG market strategist Yeap Jun Rong.
“But recent weaker-than-expected economic data from China may still fuel caution, while risk appetite may still be weak ahead of the upcoming Federal Open Market Committee (FOMC) interest rate decision,” Yep said, quoting words from the Federal Open Market Committee.
Expectations are high that the Federal Reserve will begin its rate-cutting cycle on Wednesday, as federal funds futures show the market currently sees a 69% chance of a 50-basis-point rate cut.
“Rising expectations of significant interest rate cuts have boosted sentiment in commodity markets,” ANZ Bank analysts said in a note. They added that ongoing supply disruptions are also supporting the oil market.
Lower interest rates would reduce borrowing costs and could boost oil demand, supporting economic growth.
Investors are also paying attention to an expected drop in US crude oil inventories. According to a Askume survey, US crude oil inventories may have fallen by about 200,000 barrels in the week ending September 13.
Still, weaker-than-expected demand growth in China, the world’s biggest crude oil importer, limited price gains. Government data on Saturday showed China’s refining output fell for a fifth straight month in August as fuel demand fell and export profits weakened.
