International crude oil prices fell more than two percent in the previous session as traders eased fears of prolonged supply disruptions from a storm in the U.S. Gulf of Mexico, while China’s latest economic-stimulus package reassured some oil traders. Failed to impress.
US West Texas Intermediate futures fell and were down 2.7% or $1.98 at $70.35 a barrel. Global benchmark Brent crude futures fell 2.3%, or $1.76, to $73.87 a barrel.
Energy producers shut down more than 23% of oil production in the US Gulf of Mexico by Friday to deal with Hurricane Rafael. However, the latest forecasts on trajectory and intensity have reduced the risk posed by the Rafale to oil production.
“The risk of supply disruptions caused by Hurricane Rafael is diminishing as the storm continues to meander over the center of the Gulf of Mexico for the next five days,” Alex Hodes, an analyst at brokerage StoneX, told clients in a note to clients.
The storm that left a trail of destruction in Cuba this week weakened to a Category 2 hurricane on Friday, according to the latest advisory from the US National Hurricane Center.
Meanwhile, the latest round of fiscal support from top oil importer China has disappointed oil investors. UBS analyst Giovanni Stanovo said Chinese authorities announced a package meant to ease debt-payment pressure on local governments, but those measures fell far short of directly targeting demand.
“I think some market participants were expecting more stimulus measures from China,” he said. “Therefore, disappointment had an impact on prices early today.”
Oil prices have been hit hard this year by deflationary pressures on the Chinese economy, with customs data showing the country’s crude imports in October falling for the sixth consecutive month year-on-year.
Despite Friday’s losses, oil prices rose more than 1% week-to-date, supported by expectations that U.S. President-elect Donald Trump will tighten sanctions on Iran and Venezuela, squeezing oil supplies to global markets. There may be a cut.
The US Federal Reserve’s decision to cut interest rates by a quarter percentage point on Thursday could help oil prices rise more than 1% in the previous session.
