Oil settles down 2% on receding hurricane risk, lackluster China stimulus

By Shariq Khan

NEW YORK (Reuters) -Oil prices fell more than 2% on Friday as traders grew less fearful of prolonged supply disruptions from a hurricane in the U.S. Gulf of Mexico, while China’s latest economic-stimulus packages failed to impress some oil traders.

U.S. West Texas Intermediate futures led the decline, down 2.8%, or $2.01, at 70.35 per barrel by 1:32 p.m. ET (1832 GMT). Global benchmark Brent crude futures fell 2.3%, or $1.77, to $73.86 per barrel.

Energy producers shut in more than 22% of oil output in the U.S. Gulf of Mexico by Thursday as a precautionary measure to brace against Hurricane Rafael, helping lift oil prices by more than 1% in the prior session.

However, the latest forecasts on Rafael’s trajectory and intensity reduced the risk to oil production from the U.S. Gulf.

“Threats of supply outages due to Hurricane Rafael are subsiding as the storms shifts to circling in the center of the Gulf of Mexico for the next 5 days or so,” Alex Hodes, analyst at brokerage firm StoneX told clients in a note.

The storm, which left a trail of destruction in Cuba this week, had weakened to a Category 2 hurricane on Friday, according to the U.S. National Hurricane Center’s latest advisory.

Meanwhile, top oil importer China’s latest round of fiscal support disappointed oil investors. Chinese authorities announced a package easing debt-repayment strains for local governments, but those measures do little to directly target demand, UBS analyst Giovanni Staunovo said.

“I guess some market participants were hoping for more stimulus measures coming from China,” he said. “Hence, the disappointment weighing on prices earlier today.”

Deflationary pressures on the Chinese economy have been a heavy drag on oil prices this year, with customs data showing a sixth consecutive month of year-over-year declines in the country’s crude oil imports for October.

Oil prices drew some support from expectations of tighter sanctions on Iran and Venezuela by U.S. President-elect Donald Trump, which could cut oil supply to global markets. The U.S. Federal Reserve’s decision to cut interest rates by a quarter percentage point on Thursday also helped keep both benchmarks on course for about 1% week-over-week gains, despite Friday’s slump.

“In the short-term, oil prices might rise if the new President Trump is quick on the draw with oil sanctions,” said PVM analyst John Evans.

This post is originally published on INVESTING.

  • Related Posts

    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    (Reuters) – Mexico plans to set aside about $6 billion from its 2025 draft budget for heavily indebted national oil company Pemex and would help its debt obligations next year,…

    US dollar and bitcoin advance spurred by Trump tariff expectations

    By Chibuike Oguh and Harry Robertson NEW YORK/LONDON (Reuters) -The U.S. dollar rose to a 6-1/2-month high against major peers on Tuesday, while bitcoin pared gains after earlier hitting a…

    Leave a Reply

    Your email address will not be published. Required fields are marked *

    You Missed

    Economic Calendar for the Week 18.11.2024 – 24.11.2024

    • November 13, 2024
    Economic Calendar for the Week 18.11.2024 – 24.11.2024

    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    • November 12, 2024
    Mexico plans to set aside $6 billion for Pemex in draft budget, Bloomberg reports

    US dollar and bitcoin advance spurred by Trump tariff expectations

    • November 12, 2024
    US dollar and bitcoin advance spurred by Trump tariff expectations

    Gold prices stumble as strong Treasury yields, dollar bite

    • November 12, 2024
    Gold prices stumble as strong Treasury yields, dollar bite

    US oil industry urges Trump to ditch Biden climate policies

    • November 12, 2024
    US oil industry urges Trump to ditch Biden climate policies

    Oil prices hold near 2-week low after OPEC cuts demand view, dollar rises

    • November 12, 2024
    Oil prices hold near 2-week low after OPEC cuts demand view, dollar rises