Oil Prices Steady Amid Hurricane Threat and Employment Data

Oil prices stabilized on Monday as traders assessed the potential impact of a hurricane in the Gulf of Mexico and the recent nonfarm payrolls report.

As of 10:14 ET (14:14 GMT), the Brent crude contract rose by 0.3% to $71.28 per barrel, while U.S. crude futures (WTI) increased by 0.4% to $68.05 per barrel. Previously, Brent had plummeted 10% at Friday's close, marking its lowest level since December 2021. Similarly, WTI fell to its lowest level since June 2023, according to Reuters.

The US National Hurricane Center reported over the weekend that a weather system in the Gulf of Mexico is expected to develop into a hurricane before making landfall in the northwestern US Gulf Coast, a key area for American refining.

Analysts noted supply disruptions in Libya, a major oil producer, as another factor supporting prices, according to Reuters.

Additionally, the prospect of Federal Reserve interest rate cuts, following an unexpectedly soft August employment report, also helped bolster crude prices. However, uncertainty persists regarding the specifics of these potential cuts. In theory, lower borrowing costs could drive economic activity and increase oil demand.

At the Asia Pacific Petroleum Conference in Singapore, executives from global commodity firms Gunvor and Trafigura indicated that oil prices might fluctuate between $60 to $70, partly due to sluggish demand from China, the world’s top oil importer.

ING analysts stated that concerns surrounding China are likely to prompt discussions about OPEC+ options for stabilizing the market during the conference. Last week, OPEC+ decided to postpone a planned output increase for October by two months in an attempt to mitigate falling prices.

While the OPEC+ cuts may tighten the market for the remainder of the year, they do not eliminate the surplus projected for next year, according to ING analysts.

Reuters contributed to this report.