Oil Prices Rise Amid Gulf of Mexico Offline Capacity and Fed Rate Cut Anticipation, Despite China Demand Concerns
Thank you for reading this post, don't forget to subscribe!SINGAPORE, Sept 16 (Reuters) – Oil prices edged higher in Asian trading on Monday, supported by expectations of a U.S. interest rate cut this week. However, gains were tempered by ongoing demand concerns and weaker-than-expected economic data from China.
Brent crude futures for November rose by 38 cents (0.5%) to $71.99 a barrel at 0700 GMT, while U.S. crude futures for October increased by 49 cents (0.7%) to $69.14 a barrel. This follows a previous session of price declines as crude production in the Gulf of Mexico resumed after Hurricane Francine, with a rise in the U.S. rig count also easing supply concerns.
Despite the resumption of operations, nearly 20% of crude oil production and 28% of natural gas output in the Gulf of Mexico remain offline due to the hurricane’s impact. Analysts, including Phillip Nova’s Priyanka Sachdeva, highlighted that while supply concerns persist, markets are focused on the Federal Open Market Committee (FOMC) decision scheduled for Sept. 17-18. Investors are betting on a 50-basis point U.S. interest rate cut, which could stimulate economic activity and boost oil demand.
However, a 50 bps cut might signal recession concerns, which could weigh on oil demand. Weaker Chinese economic data, including a slowdown in industrial output and retail sales in August, also dampened market optimism. OANDA’s Kelvin Wong warned that weak demand from China, the world’s largest oil importer, could undermine the current rebound in oil prices, with key resistance levels at $72.20-$73.15 per barrel.
