Oil rises on U.S. output worries and expected drop in crude stockpiles
Shafaq News/ Oil prices extendedgains on Tuesday as the market eyed U.S. output concerns in the aftermath ofHurricane Francine and expectations of lower U.S. crude stockpiles.
Brent crude futures for Novemberrose 34 cents, or 0.5%, at $73.09 a barrel at 0420 GMT. U.S. crude futures forOctober climbed 49 cents, or 0.7%, at $70.58 a barrel.
Both contracts settled higher in theprevious session as the ongoing impact of Hurricane Francine on output in theU.S. Gulf of Mexico countered Chinese demand concerns ahead of this week's U.S.Federal Reserve interest rate cut decision, which should prove positive forinvestor sentiment in oil.
More than 12% of crude productionand 16% of natural gas output in the U.S. Gulf of Mexico remained offline,according to the U.S. Bureau of Safety and Environmental Enforcement (BSEE) onMonday.
"Oil prices managed to recoverslightly ... (An) extreme bearish state over the past weeks called for somenear-term stabilisation, with prices previously touching their lowest levelsince 2021," said Yeap Jun Rong, market strategist at IG.
"But a weaker-than-expected runin China's economic data lately could still be a source of caution, while thelead-up to the upcoming FOMC interest rate decision may limit somerisk-taking," Yeap added, referring to the Federal Open Market Committee.
The Fed is expected to start itseasing cycle on Wednesday, with Fed funds futures showing markets are nowpricing in a 69% chance the central bank will cut rates by 50 basis points.
Still, lower-than-expected demandgrowth in China, the world's largest crude importer, have capped price gains.China's oil refinery output fell for a fifth month in August amid decliningfuel demand and weak export margins, government data showed on Saturday.
(REUTERS)
