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Highlights
- Oil prices decline as Hurricane Rafael expected to weaken
- Brent and WTI see weekly gains over 3% despite Friday's dip
- US oil output disruption lessens, Chinese crude imports show decline
Oil prices experienced a slight decline on Friday as Hurricane Rafael, a powerful weather system in the Gulf of Mexico, showed signs of weakening. The initial surge in prices due to anticipated supply disruptions has softened, as the storm is projected to lose strength and drift further away from key oil and gas production areas. Brent crude futures fell by 0.6% to $US75.12 per barrel, while West Texas Intermediate (WTI) dipped 0.8% to $US71.78, marking a moderate correction as market concerns eased.
Despite Friday’s downturn, both Brent and WTI are on track for a weekly increase exceeding 3%, driven by earlier apprehensions around supply interruptions and anticipated changes in U.S. energy policies. President-elect Donald Trump’s potential plans to intensify sanctions on oil-producing nations such as Iran and Venezuela have contributed to bullish sentiment in recent days. Such policies could constrict the global supply of oil, although the market remains cautious while waiting for any official policy announcements.
The U.S. National Hurricane Center has projected that Hurricane Rafael will move westward, lessening its impact on U.S. oil output. The hurricane led to the temporary shutdown of approximately 391,214 barrels per day in U.S. oil production, but with the storm’s weakening, operations are expected to resume gradually. Many oil companies across the Gulf Coast, including those with significant operations in the area, are monitoring conditions closely as they plan to restore activities.
Further price pressure came from the recent strength of the U.S. dollar, which increases the cost of oil for countries using other currencies. When the dollar strengthens, oil prices tend to face downward pressure as purchasing becomes less favorable for non-dollar buyers. Additionally, reports of decreased crude imports in China, the world’s largest oil importer, added to the day’s bearish tone. October marked the sixth consecutive month of year-on-year declines in China’s crude imports, with a 9% drop, underscoring potential changes in global demand dynamics.
A rise in U.S. crude inventories also contributed to Friday’s decline, signaling higher domestic stockpiles that could help offset any supply constraints caused by the hurricane. The latest inventory data pointed to robust storage levels, reinforcing market stability despite temporary disruptions in production.
