Oil Markets Stabilize with $1 Jump as Hurricane Approaches

Oil futures saw a $1 increase in early trading on Monday as a potential hurricane system moved towards the U.S. Gulf Coast, and as markets began to recover from a decline triggered by disappointing U.S. jobs data on Friday.

West Texas Intermediate (WTI) crude futures climbed $1, or 1.48%, reaching $68.67 per barrel by 0146 GMT. Brent crude futures rose 99 cents, or 1.39%, to $72.05 per barrel.

The rebound in prices is partly attributed to the approaching hurricane in the U.S. Gulf Coast.

The U.S. National Hurricane Center reported on Sunday that a weather system in the southwestern Gulf of Mexico is expected to become a hurricane before hitting the northwestern U.S. Gulf Coast, which hosts about 60% of the U.S. refining capacity.

“Market sentiment has somewhat improved following last week’s decline,” noted independent analyst Tina Teng.

On Friday, Brent crude dropped 10% for the week, hitting its lowest level since December 2021, while WTI fell 8%, marking its lowest close since June 2023.

“Crude oil experienced its largest weekly decline in 11 months amid a gloomy economic outlook. Weak U.S. jobs data on Friday raised concerns about declining oil demand in the world’s largest consumer,” according to a note from ANZ analysts.

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The U.S. government’s jobs report revealed that nonfarm payrolls increased by just 142,000 in August, falling short of expectations. The July figure was revised down to a 89,000 increase, the smallest gain since December 2020.

Analysts anticipate that a lower jobless rate could lead to a 25 basis point interest rate cut by the Federal Reserve this month, rather than a more substantial cut.

Lower interest rates typically boost oil demand by stimulating economic growth and making oil cheaper for holders of non-dollar currencies.

However, weak demand has continued to limit price increases.

In Asia, refining margins have dropped to their lowest seasonal levels since 2020 due to weak demand from the region’s two largest economies. Additionally, fuel oil exports to the U.S. Gulf Coast fell to their lowest level since January 2019 last month, driven by weak refining margins.

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