OIL prices settled more than 2 per cent lower on Friday (Nov 8) as traders grew less fearful of prolonged supply disruptions from a hurricane in the US Gulf of Mexico, while China’s latest economic-stimulus packages failed to impress some oil traders.
US West Texas Intermediate futures led the decline and settled at 70.35 per barrel, down by 2.7 per cent, or US$1.98. Global benchmark Brent crude futures fell by 2.3 per cent, or US$1.76, to US$73.87 per barrel.
Energy producers shut in more than 23 per cent of oil output in the US Gulf of Mexico by Friday to brace against Hurricane Rafael. However, the latest forecasts on trajectory and intensity reduced the risks Rafael poses to oil production.
“Threats of supply outages due to Hurricane Rafael are subsiding as the storms shifts to circling in the centre of the Gulf of Mexico for the next five 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 US 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.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
“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.
Despite Friday’s losses, oil prices gained more than 1 per cent week-over-week, drawing support from expectations of tighter sanctions on Iran and Venezuela by US President-elect Donald Trump, which could cut oil supply to global markets.
The US Federal Reserve’s decision to cut interest rates by a quarter percentage point on Thursday could also have helped lift oil prices by more than 1 per cent in the previous session. REUTERS
