Investing.com– Oil prices were higher in early US trade on Thursday as expectations of supply disruptions in the wake of Hurricane Francine helped offset persistent concerns over slowing global crude demand.
Hurricane Francine made landfall in Louisiana on Wednesday after passing through the Gulf of Mexico, where several oil firms limited or suspended operations in the storm’s path.
Expectations of tighter supplies helped crude rebound from near three-year lows hit earlier this week, although this rebound rally now appeared to be running out of steam.
Brent oil futures expiring in November rose 0.6% to $71.06 a barrel, while West Texas Intermediate crude futures climbed 0.8% to $67.84 per barrel by 10:00 ET.
US inventories grow less than expected, product stockpiles surge
Limiting crude’s advance was government data showing a bigger-than-expected increase in gasoline and distillate stockpiles in the week to September 6.
While overall inventories saw a slightly smaller-than-expected build, the increase in product inventories raised some concerns that US fuel demand was cooling with the end of the travel-heavy summer season.
The inventory data also added to concerns that a weakening US economy will result in softer fuel consumption over the coming months. Fears of a U.S. recession were a major weight on oil prices through the past week.
Some stronger-than-expected consumer inflation data released on Wednesday sparked bets on a smaller interest rate cut by the Federal Reserve in September. This notion boosted the dollar, which also weighed on crude prices.
IEA cuts demand forecast
Focus on Thursday was also on a monthly report from the International Energy Agency, which slashed its full-year oil demand growth forecast by roughly 7.2% to 900,000 barrels per day due to tepid demand in top importer China.
The report comes just days after the Organization of the Petroleum Exporting Countries cut its forecast for oil demand growth in 2024 and 2025, also citing concerns over China.
Weak recent economic data from the country, particularly figures showing that its overall imports grew at a slower-than-estimated rate in August, has added to anxiety over oil this week. Other readings suggested that the world’s second-largest economy remained under pressure throughout the month.
Ambar Warrick contributed to this report.
