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Oil rates recover partially after 3 percent fall in earlier session
(MENAFN) Oil prices saw a partial rebound on Wednesday following a significant decline late Tuesday, which saw prices drop below USD70 per barrel for the first time since December 2021. This decrease was attributed to reports indicating a slowdown in economic activity in both the US and China, the world's largest oil consumers. By early Wednesday morning, international benchmark brent crude had increased by 0.4 percent, reaching USD69.81 per barrel, up from the previous session's close of USD69.52. Similarly, the US benchmark West Texas Intermediate (WTI) rose marginally by 0.04 percent, reaching USD65.82 per barrel compared to the previous close of USD65.79.
The recent downturn in oil prices was partly driven by OPEC's revised global oil demand growth forecast. The organization adjusted its projections downward, lowering the demand forecast for this year by 80,000 barrels per day (bpd) from the previous month's estimate, and reducing the forecast for 2025 by 40,000 bpd. Despite these revisions, prices began to recover as early trading on Wednesday responded to potential supply disruptions.
Concerns over potential interruptions in oil production due to severe weather conditions in the US also contributed to the partial recovery in prices. A storm that began in the Gulf of Mexico on Monday intensified into a "Category 1 hurricane" by Tuesday night, with the potential to impact oil production in several US states. The US National Hurricane Center issued warnings regarding the storm's potential effects on oil infrastructure.
Additionally, the US Bureau of Safety and Environmental Enforcement (BSEE) reported that about 24 percent of crude oil production and 26 percent of natural gas production in the US Gulf of Mexico was offline due to the storm. This disruption in production has further supported the upward movement in oil prices, as the market anticipates potential impacts on supply.
The recent downturn in oil prices was partly driven by OPEC's revised global oil demand growth forecast. The organization adjusted its projections downward, lowering the demand forecast for this year by 80,000 barrels per day (bpd) from the previous month's estimate, and reducing the forecast for 2025 by 40,000 bpd. Despite these revisions, prices began to recover as early trading on Wednesday responded to potential supply disruptions.
Concerns over potential interruptions in oil production due to severe weather conditions in the US also contributed to the partial recovery in prices. A storm that began in the Gulf of Mexico on Monday intensified into a "Category 1 hurricane" by Tuesday night, with the potential to impact oil production in several US states. The US National Hurricane Center issued warnings regarding the storm's potential effects on oil infrastructure.
Additionally, the US Bureau of Safety and Environmental Enforcement (BSEE) reported that about 24 percent of crude oil production and 26 percent of natural gas production in the US Gulf of Mexico was offline due to the storm. This disruption in production has further supported the upward movement in oil prices, as the market anticipates potential impacts on supply.
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